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Friday, 11 September 2015 05:00

Metro Area Rental Industry is Fueled Primarily by Millennials

blog chartMillennials are on the move, says RealtyTrac – a real estate data analytics firm.

Millennials account for 69 million people, and are the country’s second largest generation after baby boomers. Their choice in whether to rent or buy will have a greater impact on housing. The aftermaths of this impact will clearly be visible on rental property availability, real estate sales, lease rates and house prices.

According to Daren Blomquist, vice president of RealtyTrac, millennials are the key to a consistent real estate recovery.

RealtyTrac also analyzed Census Bureau population data between the year 2007 and 2013 to look for the markets with the highest millennial shifts.

Washington, D.C. metro area — Arlington County, Va., and Alexandria City, Va., were the two counties which experienced percentage increases in millennials of 82 percent and 81 percent respectively. The unemployment rate in both these counties is under 4 percent.

According to statistics given by RentRange, Arlington County experienced a 6 percent rise in rent on a two-bedroom home from August 2013 to August 2014 and 4 percent rise on a three-bedroom during the same time.

Alexandria City experienced an even greater rental rise from August 2010 to August 2014 — 34 percent increase on two-bedroom homes — and 20 percent increase over the past year. Three bedrooms experienced a 9 percent increase over the four-year period and a 2 percent increase over the past year.

The third most popular county for younger couples was Orleans Parish, La., in the New Orleans metro area which experienced a rise of 71 percent. San Francisco County, Calif., was on the fourth place with a rise of 68 percent.

Orleans Parish had seen a rise on rents on three-bedroom homes reach 20 percent over the past year, but they dropped 2 percent on two-bedroom homes, says RentRange. Both categories were dropping however, over the four-year period, 7 percent on two bedrooms, and 6 percent on three-bedrooms.

One of the strongest markets for rent growth was San Francisco County, with rents rising 30 percent year-over-year on three-bedroom homes and 9 percent on two-bedroom homes. Over a four-year period, both experienced double-digit growth, with rent rising 40 percent for three-bedrooms and 38 percent for two-bedrooms. This county is considered one of the highest-priced markets for millennials, dominating with the rent of $2,904 on a two-bedroom home and $3,944 on a three-bedroom home.

Rounding out the top 5 locations for Gen-X was Denver County, Colo., which experienced a rise of 57 percent in millennials between 2007 and 2013. Rents in the county have increased at least 25 percent over the last four years, although the increase over the past year was much smaller, 4 percent for three-bedroom homes and 8 percent for two bedrooms.

As millennials enter the housing market, they look for a flexible future and are concerned about their credit rating, fewer savings for a down payment and whether they can depend on their income to keep homeownership. Although millennials still dream about achieving homeownership, they are preferring rentals in greater numbers as they put a hold on that dream.

At Rental Home Financing, we provide different types of mortgages suitable for rental investing. From blanket mortgage loans to apartment building loans, we have a diverse portfolio. Contact us at 888-375-7977 to buy an investment property, and to enjoy financial and personal benefits of owning a rental home in this booming rental market.

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