The rental market is continuously catered toward the millennial generation who has moved out of the house and is trying to save up money for a down payment.
However, the baby boomer generation has nearly just as much presence in the market, according to a study by the Joint Center for Housing Studies at Harvard University.
The study also found that households in the top half of the income bracket contributed to 43 percent of the growth in renters, as baby boomers age and are looking to downsize.
Renter growth is now at its highest level in 30 years and multifamily home construction has surpassed its prerecession level at the end of 2014, according to a study by Jordan Rappaport at the Federal Reserve Bank of Kansas City called “Millennials, Baby Boomers, and Rebounding Mulitfamily Home Construction.”
The study found that between 2010 and 2016, multifamily home starts increased from about 90,000 a month to nearly 360,000 a month. However, the report states that the age bracket that is driving multifamily construction may not be the same one that is driving occupancy.
While the younger generation is swaying toward renting due to student loan debt and the increasing age of interest in marriage, the drivers of older adults’ renting instead of buying is drastically different.
Between 1990 and 2013, the surge of multifamily units occupied by older adults was high and driven almost exclusively by the baby boomers.
The report states that between 2000 and 2013, a “small but increasing share of individuals in their 50s lived with their parents.” The recession played a big role, and likely continues to do so. This group is also expected to begin downsizing to a multifamily unit more rapidly with age than in previous decades.
By the time Americans are getting to the age of 70, they are considering downsizing as a more attractive option, but the larger population of homeowners-to-renters is beginning around the age of 75. Baby boomers are just now getting to that age bracket, with the oldest ones in the generation hitting the 70 mark next year.
The short-term multifamily construction rate is expected to continue, with millennials taking the wheel; over the long term, however, the baby boomer generation is expected to make headway in the rental market.
While millennials are interested in living in dense urban cores, the baby boomer generation is expected to be more interested in a rental property with a bit more space and more available amenities.
However, questions arise on what baby boomers will want in their home and its location, as the generation has been known to have consistently different tastes compared with generations before them.
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