Millennials will dominate the workforce by 2015 and will comprise 75 percent of the workforce by 2030, according to the U.S. Bureau of Labor Statistics. With the increase of millennials in the workforce, one would assume that the housing market will strengthen. Not quite.
The dreams of graduating college, landing a good job, getting married, and buying a house have shifted dramatically with this generation Why? Well, first off many are graduating college with substantial student loan debts delaying saving money for a house. Secondly, many were old enough to witness the housing market crash and see how that affected so many people. Thirdly, many are aware that because of their financial position, they will struggle to qualify for a traditional home loan and avoid the home buying process. So, they rent.
It is estimated that the apartment sector has absorbed 45,000 units per quarter for the last three years – the strongest demand since the technology boom of the late 1990’s. Not only that, but the average vacancy rate is 4.3% with some markets as low as 1.9%. REIS predicts that rent growth should be greater now to 2016 than during any four-year period of the last two decades for Class A/B multifamily properties in good locations and with higher-end amenities which brings us to our next point- what millennials want in apartments.
First, most millennials will agree that location is in the top criteria for renting apartments. Many leans toward a more urban lifestyle and either want to be in the city or just on the outskirts of the city. Millennials are very much into the “modern luxury” look with apartments so either having hardwood floors, faux hardwood, granite countertops and other upscale amenities are right up their alley. Not only are millennials wanting a pet-friendly apartment complex, but having pet parks or pet play areas at are becoming more of a need than want.
It is safe to say that for the next few years, vacancies will be low with millennials choosing to rent over purchasing homes. The flexibility and freedom that comes with renting is just more desirable to this group then it has been in the past. So, I’m sure we will see more new apartment complexes being constructed and older ones being renovated to fit the lifestyle of this large demographic.