If you’re a renter, you’re certainly not alone. Over 39 million rent here in the U.S., adding over $1.3 trillion to our national economy! But the face of America’s renters is changing. And that may impact you. Here with what you need to know is Shari O.
39 million is a heck of a lot of people. Have there always been so many renters?
- First Timers
- Baby Boomers-Empty Nesters
For sure! An average on a million new renter households were formed each of the last five years. New apartment absorption has been in the rise for the last few years (since Q3 2015). There are several reasons for this demand. Younger generations are delaying home buying, in large part due to slow wage growth and student debt. Aging households including Baby Boomers and empty nesters, typically living longer and healthier more active lifestyles where they don’t want to be burdened with owning and maintain a home, are often deciding to rent nowadays rather than stay in their original homes or move into some sort of mature community. So renting in not for only younger generations anymore. In fact, more than half the net increase in renter households over the past decade are due to folks over the age of 45. The other major contributor is immigration. We often hear about immigrants impacting jobs. But immigration has a bigger impact on our rents and home prices it has on our labor market.
How long is this demand for rentals expected to continue?
- 2030 4 Million
- South – West
- All Price Points
By 2030 we’re expecting to need around 4 million new apartments just to keep up with the demand. We’re expecting demand to be especially high in areas like Florida, Texas, North Carolina, Arizona, Georgia, Nevada, New York and Virginia, but also many other areas throughout the South and West. And that’s across for board for all price points.
What does this mean for our own wallets and what can we do to come out ahead now that we know this?
- Housing Costs
Well, it bodes well for anyone in the apartment construction industry. That’s will certainly have a positive impact on our nation’s economy. Folks looking for work, especially in these geographic areas may want to consider work or investment in that industry. We’re talking about buildings with five units or more, but certainly there will be demand for smaller buildings. Folks renting will want to keep in mind that as demand increases, so do prices generally. Meaning we can expect rents to continue rising. We’re expecting to see a shortage for about 7.4 million affordable units and an affordability impact on about 6 million older low income renters. If you’d like to control your own housing costs, buying a home may be the best alternative. Merely meeting current demand will require building at least 325,000 new apartments a year. When you consider the fact that under 250,000 were built each year from 2012 to 2016, we’re already behind the proverbial eight ball.