Millennials Lead the Way in Housing Trends
Rental Decade
The RentCafe has some interesting stats on Housing Trends for the Decade
US Renters Surpass 100 Million
The number of Americans who rent reached 108.5M in 2018, up from 99.4M in 2010. At the same time, the share of renters now makes up 34% of the general population and is the largest it’s been since 1960, when 36% of Americans were tenants. By comparison, there were 202M homeowners in 2018, up from 189M in 2010.
Renters the Majority Population in 20 Additional Cities
20 U.S. cities made the switch from a homeowner majority to a renter majority in the past ten years, pushing the share of renter-majority cities from 28% to 32%. Renters now make up more than 50% of the population in 82 of the 260 cities we analyzed for this section.
Increases in Number of High-Earning Renters
Nationally, the number of households earning more than 150k per year who rent increased two times faster (+157%) than the number of high-earning homeowner households (+78%) since 2010, as progressively more wealthy Americans choose renting over homeownership.
What About Kids?
Fewer and fewer American families are having children. The number of households made up of families with children has decreased by a noticeable 1.3M since 2010.
Changing attitudes towards child-rearing and affordability issues aren’t only impacting when Americans have children, but also where they live once they do. The decrease in families with children was significantly stronger in the homeowner segment—the number of families with children who own their homes dropped by more than 1 million in the past decade (-5.6%), while the number of renting families with children stagnated (-0.5%).
Renting Increased in Popularity Among Older Households
The number of aging renter households (60+) went up by 32% in the past decade, while that of aging homeowner households went up by 23%. At the same time, the number of renters under the age of 34 and in the 35 to 59 segments both increased by only 3% and 7%, respectively, while the number of homeowners in these age groups has decreased over the years.
Millennials Left College Towns for Job Hubs
Most of the millennial population entered the job market this decade, and as the second-largest generation in American history—recently dethroned by Gen Z—they’ve made an impact on the cities they studied and now work in. If in 2010, the first ten cities with the highest share of millennials were college towns, in 2018, they had been replaced by job hubs.
Cambridge is the exception to the rule. The home of Harvard and MIT came in 10th in 2010 but climbed to the top of the ranking in 2018. The rapid growth the city is experiencing explains the trend, as more and more high-technology employers have been fueling its job market.
The above text and charts courtesy of the RentCafe. Let's fill in some additional pieces of the puzzle.
Millennial Definition
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PEW defines anyone born between 1981 and 1996 (ages 23 to 38 in 2019) is considered a Millennial, and anyone born from 1997 onward is part of generation z.
With generations defined, we can better explore what's happening.
Homeownership Rate
Annual Homeownership Rate by Age Group
Those figures are from the 2018 Census report Older Buyers Near Pre-Recession Levels.
The rebound starting in 2016 has a simple explanation. All of the millennials were of working age and most out of college.
New Home Sales Highest in 12 Years
It's no surprise New Home Sales Highest in 12 Years
Key Problems
- Housing bubble
- Attitudes
- Student debt
- Aging Boomers
Housing Bubble
Despite falling interest rates the housing bubble has been reblown: The Last Chance for a Good Price Was 7 Years Ago.
Attitudes
Millennials have different attitudes towards debt, mobility, and family formation than their boomer parents.
Student Debt
Millennials are also loaded up with student debt. Many of those who would like to buy a home or get married, can't or won't.
Aging Boomers
Some millennials are trapped at home taking care of their aging parents.
And some boomers want to downsize but cannot afford to move where they want to.
These trends, especially secular attitude changes, all put downward pressure on the desire home buying.
Mike "Mish" Shedlock