With collective student loans totaling $1 trillion, it’s no surprise that those in their 20’s through early 30’s, or Millennials, are more hesitant to buy big ticket items than before. Sometimes referred to as “Generation Rent,” they have valid reasons for resisting the urge to buy, and their reluctance to buy homes may be positively impacting rental property owners.
So how, exactly, does their refusal to buy benefit rental property owners?
Impacting the rental market
Millennials, as a group, know that their futures are not secure. Jobs can be lost in a matter of weeks, which could leave them with a mortgage or car payment that they can no longer afford. Renting offers flexibility in a time when they never know what’s coming next.
Part of the reason for fewer young homeowners could also be the increased difficulty in obtaining a mortgage. Between 2009 and 2011, only nine percent of first-time mortgage applicants between 29 and 34 years old were approved.
The vacancy rate of rental properties in the United States is at its lowest level since 2002. That means that, despite the increase in college graduates moving back in with their parents, many are renting more than before overall.
The higher demand for rental properties increases the value of the rental properties that are available. Properties that would have rented for significantly less a few years ago are now seen as hot commodities.
Many Millennials, or Gen Y-ers, are also putting off marriage and having children, as these are seen as too big of a commitment to make with an unstable professional situation.
We now see many more renting services for transportation solutions like Zipcar and bike-sharing services that are popping up throughout major cities in the United States. Although tuxedo rentals for men have been common for many years, clothing rentals among women are becoming more and more popular. Services like Rent the Runway, where women can rent designer dresses for formal events, are growing at a rapid pace.
Although buying may give you more freedom when it comes to making a home your own and unburdening yourself from a lease, it’s a tradeoff that many Millennials simply aren’t willing to make until they have a little more stability.
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