Real estate companies think Millennials will become “career renters” -- at least in the near term. In fact, the number of career renters is growing.
Many students in their mid 20’s are renting until they finish their schooling. However, at that point, they will have 10’s of thousands of dollars in loan debt. Many can envision renting for the rest of his life.
They don’t want to take on more debt. They don’t want to have another credit check; they don’t want to talk to another set of bankers; and they don’t want to put so much liability on the line.
For many Americans hard hit by the recession or dealing with large student loan debt, the idea of renting indefinitely has become appealing. No mortgage to pay off, a living space that comes with built-in amenities, and a landlord who takes care of upkeep and maintenance.
This may be particularly true for the country’s youngest adults, who are delaying homeownership and for whom taking on a mortgage is seen as one more debt to pay off. From 2006 through 2011, 25- to 34-year-olds experienced the largest decline in homeownership compared with any other age group. Among households headed by 25- to 34-year-olds, renters increased by more than a million from 2006 to 2011, while the number who own fell nearly 1.4 million.
Today’s young adults are not only delaying homeownership, they’re delaying many of the life events that often come with homeownership, including marriage, children and settled careers. The flexibility to be able to pick up and leave an apartment building or city for a job can be crucial.
Not Attached to Owning
For others the decision to rent long term is motivated as much by finances as by lifestyle. Flexibility is the biggest factor in choosing to continue renting. They feel at ease knowing that if they had to relocate, the process would be less complicated.
But they are also averse to putting themself in a financial bind. A house can be an investment, but they are not looking to go further into debt.
Real estate companies say they’ve noticed rental residents are now more often single, older and staying longer than in past decades. And those who do move out are more often moving to another rental over buying a home.
The trend makes sense given Millennials’ affinity for renting just about everything else, from cars to clothes.
A lot of young people don’t have the same attachment to ownership of anything.
An iffy job market has also continued to permeate other aspects of Millennials’ lives, especially where and how they live.
They entered the job market when it was harder to find a job, and the effects of entering the labor market when jobs are scarce are long term.
Going High End
To some extent, real estate developers anticipated this trend, and started offering rental units in locations attracting young professionals to meet demand, often equipped with high-end amenities such as pools, gyms, brand-new kitchen appliances and social events for the building.
In light of where we are in the economy, people are still looking for a quality place to live, but they’re not interested in a long-term deployment of their capital in homeownership.
Real estate developers say renting appeals to today’s young adults not only because it requires less responsibility but also for its ease in urban areas. Metropolitan cities are attracting young adults.
Detroit Free Press