Latest figures for homeownership in the US point to a slight increase in the rate in Q2 this year. More millennials bought homes between April and June, pushing the homeownership rate up in this group. Traditionally the strongest sector in the US rental market, they are about to be joined by Generation Z, a whole new target for rental properties.
According to statistics released by the US Census Bureau, homeownership in the US stood at 63.7% in Q2 this year. The figure represents a slight rise (0.8%) on Q2 2016 when homeownership levels fell to their lowest on record.
More millennials own homes
The millennials, the biggest sector of the US rental market, bought more homes in Q2. This generation, representing American citizens aged between 25 and 40, increased their homeownership and were the only generation group to do so. In all other age groups, homeownership fell.
Between April and June, 35.3% of millennials owned their home, 1% more than the previous quarter. The largest increase occurred within the 25 to 29-year-old age group where 2% more bought properties in Q2.
However, despite the slight increase, homeownership among millennials remains the lowest of all generations. And this age sector remains the biggest target group for the US rentals since 64.7% rent rather than buy a property.
Homeownership highest in older generations
The latest statistics point to high homeownership among the older generations. It peaks among those over 65 where 78.2% own their home. The rate for Americans aged between 55 and 64 is also high and stood at 75.4% in Q2.
New job favour US rental market
The US created upwards of 2.158 million jobs in the year to July and all signs point to a continuation of this trend for the rest of this year and during 2018. Several Florida metro areas rank among the hot spots for jobs in the country. Jacksonville, Orlando and Tampa currently have some of the fastest employment growth rates in the US.
As a result, Florida represents one of the best locations for buy-to-let investment in the US. Rising prices in the state plus a low inventory make rental properties the only option for many new residents.
New generation for rental properties
Despite the slight peak in homeownership among millennials, general consensus is that the group will continue to represent the largest sector within the US rental market. However, the next generation comes hot on their heels.
According to Axiometrics, Generation Z offers as much or more potential. This age group, made up of people born since 1995, currently makes up over a quarter of the US population. By 2020, their population share will rise to a third.
As they find employment and leave home, members of Generation Z are entering the US rental market. Given the continual rise in US property prices and fall in affordability throughout the country, this generation overwhelmingly opts for rentals.
Based on current population growth figures, analysts believe that the US will need 4.6 million more rental apartment units by 2030. Homeownership may be rising slightly but there are no signs of a drop in demand in the US rental market.