3 Current Population Trends that Will Affect Rental Markets
June 30, 2020
With every new year that passes, the population of the US changes. Throughout the country, the population is growing more diverse and industries everywhere are changing to adapt to these new societal “norms.” The apartment community industry should also be making some accommodations to prepare for or adapt to changes in rental market requests. While some trends may have little effect on the rental market, there are a few choice trends that are occurring across the country right now that can and will play a huge role in the future of the rental market.
Who’s Getting Married?
While marriage hasn’t exactly become a thing of the past just yet, newer generations like Millennials and Gen Zers are finding themselves more likely to put off marriage. Some couples have even chosen to cohabit permanently, without saying their “I do’s.” One reason for seeing a decrease in marriage is financial instability. Two-thirds of couples who lived together before marriage cited finances as the reason they were not married to their partner. Millennials and Gen Zers that have reached early adulthood are often saddled with a substantial amount of student loan debt, and many across the country have complained about the difficulty of finding well-paying jobs within their industry of study.
There’s also been a rise in the number of couples who have lived with unmarried partners before getting married themselves. Almost a quarter of couples see living together before marriage as a test of their relationship and long-term compatibility. Couples who have chosen to move in together before marriage noted convenience and financial stability as an important factor in their decision-making process, whereas married couples didn’t factor these reasons in as heavily.
Putting off marriage has one significant effect on the rental market. It keeps tenants renting. Because couples are putting off marriage until they are financially stable, this means the majority of married couples can purchase a home. In most marriages, couples seek out a home together as the next “step” or progression of their relationship. For couples that are putting marriage on hold, renting is the more appealing option because it provides more ability to relocate to better job opportunities if necessary. Student loan debt also incentivizes unmarried couples to rent as well due to rent frequently being more affordable than a house payment.
Hold the Baby
The current rental market isn’t just holding off on marriage, they’re holding out on having children too. Nearly half of millennials (which account for 60% of the current rental market) do not live with family, defined as a spouse, child, or spouse, and child. It’s not surprising either. The average wedding in the US costs anywhere from $17,000 in Alabama to $37,000 in Hawaii. And, according to the U.S. Department of Agriculture, it costs $233,610 for a middle-income family to raise a child today. These costs seem out of reach for much of the current rental market, many of whom (13%) feel they will be permanent renters due to the cost of purchasing a home.
The graph demonstrates data from the National Multifamily Housing Council which breaks down the percentages renters based on marital status and whether they have children or not. Only 9% of renters are married couples with children. Single-parent families are more likely to rent due to financial constraints, but married couples with children are often driven to purchase a home for reasons like privacy, yard space, stability, etc.
Much like the desire to put off marriage, holding off on having children equates to more long-term residents. Affordability is the main driving factor across all ends of the market and single males and females will jump on the best opportunities at fair prices. Apartment communities should also direct their leasing to pull in Millennial and Gen Zers by providing amenities that provide opportunities for socialization or social gatherings, as this will provide further motivation for single residents. Socialization is important for everyone, and if some of your tenants are single, they may be spending a lot of their time alone. Communities that offer social amenities or gatherings like BBQ Grill Nights will increase move-in rates and resident retention.
Women Weaning the Wage Gap
Women across the US are making strides throughout multiple industries by gaining more education and learning skills that will aid them in attaining higher-paying jobs. While women still dominate the occupations that require high social involvement, such as teaching, counseling, and retail, there is a growing base of women working in more analytical fields like accounting. And, their efforts are paying off. Women have increased their earnings by 58% since 1980, and employment in analytical fields has greatly increased, providing even more opportunities for women to enter that area of the workforce.
Single women currently represent the highest percentage of the rental market. As the need for jobs pushes women into skilled occupations, women have an increased ability to be self-sustaining than women from previous generations. Financially secure women have also been found to take a longer time to marry. Well-educated women are less likely to marry a person with less education than themselves, and this often means that women will not settle for an unfulfilling relationship. Slower marriage rates, as mentioned above, increases the length of rental time and self-sufficient women are far more likely to prefer living alone, which equates to more opportunities to fill vacancies.
Apartment community owners need to note that safety is at the forefront of the majority of women’s minds, especially if they are living alone. In most recent studies, 61% of women admitted that they actively take steps to avoid sexual assault, and 50% of women do not feel safe walking alone at night. Single women are more likely to choose communities they feel are more secure such as gated communities, areas with ample security cameras, and more. If there are ways for owners to increase the safety of their apartment communities, it would be wise to invest in them, as these precautions will be a motivating factor for female renters to choose a specific community.