A recent survey of the huge millennial generation in the US (Americans born between the 1980’s and 2000’s) reveals that the majority prefer rental property and aren’t ready to buy a home yet. Millennials also state a strong preference for neighbourhoods with easy access to amenities and claim they’re highly mobile. Single family homes make up a significant proportion of millennial rentals, highlighting the investment opportunities in this type of US property.
The survey Gen Y and Housing: What They Want and Where They Want it, published recently by the Urban Land Institute asked Generation Y (also known as millennials) a series of questions about their housing needs and preferences. The results reveal some interesting data, particularly for investors interested in buy-to-let property in the US.
This generation of Americans numbers nearly 79 million people, making it the largest population segment in the US. As a result, their trends and preferences are likely to mark tendencies in the US property market over the next five to ten years.
Among those surveyed, 63 per cent live in the suburbs where they value high degrees of walkability, transport alternatives and easy access to amenities such as shops and leisure venues. Leanne Lachman, co-author of the survey noted that the millennials’ preference for an urban lifestyle shows that “they want to live where it’s easy to have fun with friends and family”.
Around half the millennial generation live in rental accommodation and claim they are likely to continue to do in the short term because of the flexibility offered by rentals – the survey also found that 45 per cent had moved at least twice in the last three years. “This is a generation that places a high value on flexibility,” said Lachman. For Generation Y, rental property not only gives them flexibility, it frees them from maintenance responsibility and long-term commitments. The average monthly rent paid by millennials is US$925.
In terms of property types, apartments stand out with low-rise condos in particular demand from the millennials although single-family homes are increasingly popular. 38 per cent choose this type of rental property because of the privacy, space and possibility of a garden. The survey predicts that single-family-home rentals “will continue to make up an important part of the rental market in the year ahead”.
Just over a quarter of millennials are homeowners, reflecting the general tendency in the US as a whole – homeownership in the country is currently at its lowest levels for over 20 years. However, 70 per cent of the non-homeowner millennials claim they expect to buy a home by 2020. An urban location is important to most of those interviewed, although price takes priority in their investment criteria.
The huge size of this generation makes it extremely influential and these 79 million Americans will undoubtedly shape the US property market over the next five years, both in the rental and resale sector. Rental properties will continue to feature as the main preference because millennials value mobility so highly, but their aspirations to become property owners will offer excellent exit market opportunities for sellers.
Source: Urban Land Institute