Millennials Drive Demand for Rentals in Metro Areas
The young are on the move, according to data crunched and released by real estate data analytics firm RealtyTrac.
Millennials — the nation’s second biggest generation behind baby boomers, accounting for 69 million people — will have significant impacts on housing as they consider whether to buy or to rent.
This impact will be visible on rental property availability, lease rates, real estate sales and home prices.
“The millennial generation is the key to a sustained real estate recovery,” said Daren Blomquist, vice president of RealtyTrac.
RealtyTrac recently analyzed Census Bureau population data between 2007 and 2013 to find the markets with the biggest shifts in millennial populations.
The top two counties for percentage increases in millennials were in the Washington, D.C. metro area — Arlington County, Va., which saw an increase in millennials of 82 percent and Alexandria City, Va., which saw an increase of 81 percent. Both counties have unemployment rates under 4 percent.
In Arlington County, rent on a two-bedroom home rose by 6 percent from August 2013 to August 2014 and went up 4 percent on a three-bedroom during the same period, according to statistics provided by RentRange.
When comparing a four-year period, from August 2010 to August 2014, rent was up 15 percent on two-bedroom homes and up 5 percent on three-bedroom residences in Arlington County with median rent more than $2,400 as of August.
Alexandria City saw an even greater rental increase — up 34 percent on two-bedroom homes from August 2010 to August 2014 — and up 20 percent over the past year. Three bedrooms gained less ground, up 9 percent over the four-year period and up 2 percent over the past year.
Orleans Parish, La., in the New Orleans metro area, was third most popular for millennials with an increase of 71 percent, and San Francisco County, Calif., was fourth with an increase of 68 percent, according to RealtyTrac.
Orleans Parish saw rents on three-bedroom homes rise 20 percent over the past year, but they dipped 2 percent on two-bedroom homes, according to RentRange. Both categories were down however, over the four-year period, 6 percent on three-bedrooms and 7 percent on two bedrooms.
San Francisco County was one of the strongest markets for rent growth, with rents up 30 percent year-over-year on three-bedroom homes and up 9 percent on two-bedrooms. Over a four-year period, both saw sizable double-digit growth, with rent up 40 percent for three-bedrooms and up 38 percent on two-bedrooms. The county is one of the highest-priced markets for millennials, commanding rent of $2,904 on a two-bedroom and $3,944 on a three-bedroom home as of August.
Rounding out the top five locations for millennials was Denver County, Colo., which saw an increase of 57 percent in millennials between 2007 and 2013. Rents in the county have risen at least 25 percent over the past four years, although the rise over the past year was much smaller, between 4 (three-bedroom homes) and 8 percent (two bedrooms).
As millennials approach the housing market, they want flexibility in their future and have concerns about their credit rating, lack of savings for a down payment and whether they can count on their income to sustain homeownership. Millennials still dream about homeownership, but they are turning to rentals in greater numbers as they postpone that dream.
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