Below is an excerpt from an article written by the Center for Housing Studies of Harvard University
GROWTH IN RENTER HOUSEHOLDS
Demand for rental housing continues to surge, driven by a combination of demographic, economic, and lifecycle trends. As millennials and immigrants form millions of new households, they are increasing the diversity of demand.
The number of renter households has climbed steadily for a decade As measured by the Housing Vacancy Survey, renter growth soared by roughly 9 million households between 2005 and the third quarter of 2015—marking the largest increase over any 10-year period dating back to 1965 and bringing the total number of renters to 42.6 million. And with growth accelerating in recent years, the 2010s are on track to be the strongest decade of renter growth ever recorded, with the addition of 1.05 million net new households per year so far. This is nearly double the pace of growth in the 1970s when the baby boomers came of age. Renting has increased among all age groups, household types,and income groups. Population growth on both ends of the age spectrum has driven up the numbers of both younger and older renters, while significant declines in homeownership rates have lifted the number of middle-aged renters. As a result, the number of renter households aged 50 and over jumped from 10 million to 15 million, accounting for more than half of renter growth over the decade. The number of middle-aged renters 30–49 years old climbed from 15 million to 18 million, contributing a third of the growth in renters. At the other end of the age distribution, the number of renter households under 30 years old rose from 10 million to 11 million, representing about 11 percent of renter growth in 2005–2015.
Three major demographic trends will shape rental housing demand over the next 10 years. First, the aging of the millennial generation will continue to boost the number of new renter households. Millennials under age 30 currently make up 11.3 million renter households, and half of the members of this generation are still in their teens. Over the coming decade and barring any change in homeownership rates, the number of millennial renters will double to 22.6 million and the subsequent generation will add another 500,000 new households to the ranks of renters. The second trend supporting strong rental demand is the growing minority share of households. Strong immigration both past and present means that minorities will contribute more than three-quarters of household growth in 2015–2025. Hispanics alone should account for 40 percent of the increase. Given the persistently large gap between white and minority homeownership rates, growth in the minority share of households may boost demand for rental housing. The third demographic trend is the movement of the baby-boom generation into the 70-and-over age group, significantly increasing the number of senior renters. Over the coming decade, most of these older renters will simply be aging in place.
But as the baby boomers begin to reach their 70s in 2015–2025, some of the growth in renter households will come from older homeowners making the transition to rental housing in order to accommodate their changing needs for accessibility. Other social and economic forces will shape future rental demand as well. With across-the-board declines in homeownership rates and delays in major life events such as education, career advancement, marriage, and parenthood, more households of all types are renting their housing. High student debt, damaged credit, and limited availability of mortgage financing are also reducing the demand for homeownership. Furthermore, longer-term structural shifts in the economy may play a role in increasing rental demand, such as growth in lower-wage service jobs and declines in higher-wage production jobs. While some of these conditions are tied to the economic downturn and may be temporary, others may persist. Given that homeownership rates for most age groups are now at historic lows, however, renter household growth will almost certainly slow from its current torrid pace. Even so, JCHS household projections suggest that growth in the adult population alone will be enough to drive the addition of more than 4.4 million renter households by 2025.
With the increase in demand we see on the horizon, we see apartments as a great long term investment.
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