Though most believed it wouldn’t, the demand for rental properties is exploding across the country. One of the major factors in this explosion is the fact that millennials are staying put in their rentals and flocking to the suburbs looking for more rentals. According to a survey from Freddie Mac, a record 82% of renters believe that it is more affordable to rent than to own—a number that is up from 67% a year ago.
Ultimately, it is believed that millennials will aspire to buy homes. But right now, factors such as large numbers of newly created households, rising student loan costs and skyrocketing child care costs put the dream out of reach. Add to the equation that many baby boomers are now looking to downsize and we’re seeing a trend that simply has not been seen before.
With the demand for multifamily so high, prices have increased 11% from a year ago. That number is expected to increase due to the demand.
Although multifamily construction is growing rapidly, single family construction is not. Builders are building single family homes less, which in turn in causing prices on the market to inflate, and in turn buyers are not buying.
With the age of a “sharing economy” upon us, apartment life appeals to more millennials than home buying and it will be interesting to see if the trend continues with younger generations.