Rent vs. Buy

Those Millennials* are influencing more than just technology!  “Those Millennials” are a force to be respected…and are now making their mark on real estate pricing more so than any other group, including Baby Boomers.

Rent in US
Source: RENTCafe™

Up until recently, it has been the younger generation who has been a major factor in running up residential rental prices in real estate markets throughout the country.  Back in July 2016 I referenced what $1,500 per month in rent got you in various cities in the US.**

The newest information I read in The Wall Street Journal says that Millennials are now becoming “of age”, forming families and settling down. Settling down typically leads to buying, rather than renting, a home.  This development is lowering the overall demand for rental houses (although the data points to luxury apartment rentals holding up relatively much better). While rental home prices coming down may be a good thing for the potential renter, as an investor this is not a positive factor. Owners of the largest residential property companies have expressed mild worry and are offering concessions to renters in certain markets.

The supply of new homes still generally lags the demand coming from those looking to move into a house.  But believe it or not, the marriage rate of Millennials over the coming 3-5 years is a critical factor in following where this trend will go.  Real estate is a truly cyclical asset class.  But even amidst typical cycles, the Millennials are making their mark.  Stay tuned!

And Happy Veteran’s Day to all our country’s Veterans.  We thank you!!

*The term “Millennial” is widely defined as those born between 1982 and 2004, or those who have reached adulthood in the early 21st century.  

**According to RENTCafe™, Memphis and Indianapolis were among the cities that bought you the biggest residential rental space; New York City and San Francisco were among those that bought the smallest. July 2016.


Leave a Reply

%d bloggers like this: