WHY US BUY-TO-LET PROPERTIES TICK EVEN MORE BOXES

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Why US buy-to-let properties tick even more boxes

Changes in demographics and housing preferences are pushing up demand for rental properties in the US. Demand is particularly strong among millennials and those over 55, two sectors currently taking the rental market by storm. These trends mean US buy-to-let properties tick even more boxes for investors.
 

According to Realtor.com, the rental sector is currently “developing faster than any other portion of the housing market”. The number of renter household is outpacing the purchase market all round. “Almost all the housing demand in recent years has been filled by rental units,” said Sara Strochak, a research assistant at the Urban Institute, quoted by Realtor.com.
 

Change in Lifestyle

The US rental sector has changed greatly. Once buying a property was far preferable to renting, particularly among older generations. Owning a home was a major aspiration, part of the American way of life. Since 2007, however, renting has become more mainstream and a lifestyle choice among a growing number of households.
 

The millennials, one of the largest generations in the US, make up a large proportion of rental households. They increased by over half a million between 2009 to 2015 and now represent one of the biggest supply markets for US buy-to-lets.
 

This population group has myriad reasons for choosing to rent rather than buy. One of the biggest deciding factors is financial – many millennials have accumulated high student debt. This means they often don’t have funds for a down payment and are reluctant to take on a mortgage. In addition, millennials like the flexibility offered by rentals, both for travel and work reasons.
 

Over 55s Also Opt for Rentals

Perhaps surprisingly, the over 55s have also embraced rental properties as a lifestyle choice. A survey carried out by RENTCafé found the number of households over 55s choosing to rent rather than buy went up by 28% between 2009 and 2015. This is the biggest percentage increase among all age groups.
 

Americans over 55 are typically looking to downsize and relocate to areas offering a better climate for their retirement. According to RENTCafé, they are “embracing renting in droves”.
 

Florida is one of the top location choices. In Tampa, the RENTCafé survey found that the number of rental households over 55 went up by 61%, the second highest in the US. Miami also saw a significant increase as did Houston.
 

Detached Properties and Townhouses in Demand

And within the rental sector, a certain type of property is in particular demand: the single family home and townhouse. Statistics point to a 30% increase in lease for this sort of home over the last three years. In 2006, single family homes and townhouses accounted for 31% of the rental market. They now make up 35% of the 44 million rental units in the US.
 

According to RENTCafé, Americans over 55 prefer single-family-home rentals because they represent “a place that offers a convenient, quality lifestyle and a comfortable living space”. This type of rental in the suburbs is even more popular among this age group. US buy-to-let single family homes therefore have a ready market, both among millennials and older households.
 

Better Educated Renters

Another shift in rental trends comes in the level of education among rental households. The survey revealed that those with a university degree or higher now represent a much larger proportion of the market.
 

Between 2009 and 2015, new rental households with a university education went up by 26% in suburbs and by 20% in the cities. In Tampa, they increased by 38%, the highest in the country. New renters among the lowest education levels went up by the least.
 

(Sources: Realtor.com, RENTCafe)

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