The Millennial Impact on the Real Estate Market
Millennials are a demographic profiled for everything from their influence on current fashion trends to their effects on the workplace; however, understanding exactly how this group will impact the real estate market is still developing. Early on millennials seemed poised to become entrenched inhabitants in upscale urban apartments, but time is showing millennials may not be so different from older generations when it comes to housing trends.
The idea of living in a vibrant and bustling urban scene in the heart of downtown cities may have sounded inviting to this demographic early on in their living experience; however, as this generation ages they're facing the same life challenges as any group. Will their living space keep up with real-life demands? The hip apartment great for hosting social soirées may not fit the same when your social scene suddenly involves young and growing children. In fact, a growing family creates the additional pressure of finding the right educational opportunity and many inner-city schools may not meet the rigorous demands of millennial parents. A young family also means additional space needs that a once-perfect apartment may no longer provide.
What's this all mean for millennials? Older millennials now appear to be fleeing the concrete jungle for the greener pastures of the suburbs, as their parents' generation did. More affordable suburban housing options with higher-rated schools are proving inviting to this profiled demographic. A house with plenty of room, a yard, and a good school is a powerful draw. As millennials move from the urban apartment environment into the suburban housing world, this provides opportunities: not all will undertake a mortgage, as some millennials will rent their suburban retreats. Data suggests that for those millennials who aren't buying homes, factors like student debt and needing a large down payment play a major role in keeping them as renters. Millennials may go from being a reliable apartment demographic to a consistent group in the home rental market.
Despite the possibility of losing a fair amount of the millennial group, the city apartment market will still be able to rely on consistent rental demographics like students, city employees, and those who simply prefer their urban address. Time will tell how the millennial generation differs from those before in their renting and buying choices; however, currently they appear to be headed out of the city and into the heart of the 'burbs...and into purchased and rental homes. You can read more about why millennials will continue to be a part of the rental market here from a great piece in Investopedia: http://www.investopedia.com/news/real-reasons-millennials-arent-buying-homes/.