For decades, millions of people chased the American Dream: A good job, a small family, a white picket fence, and a nice home. Today, however, younger generations are running after something entirely different. Saddled with student loan debt and few solid job prospects, many millennials are forgoing homeownership in favor of renting. Aside from the freedom from maintenance fees and upkeep costs, renting also gives this group the flexibility to make a move if a promising opportunity arises.
As more and more millennials have opted not to buy homes, the demand for rentals has skyrocketed leading to a boom in the construction of rental apartments, according to an article in Mortgage News Daily. In July, multifamily housing starts rose to a “seasonally adjusted rate of 1.09 million units and on the adjusted basis was the highest monthly start rate in six years, 101,000 units.” Additionally, the “absorption rate of rental units has also picked up and the most recent figures for newly built, unfurnished, unsubsidized apartments puts rentals at the fastest pace in a decade,” according to a report by Freddie Mac.
This increase in demand, as one could probably assume, is “reciprocal of the decline of overall home ownership” in America which fell to the lowest rate since 1995 (64.7%) in the second quarter of this year. A demand for the construction of more rental units has also been driven by falling vacancy rates which currently sit at their lowest levels in 14 years.
Overall, the multifamily sector is expected to be the continued “bright spot” in housing as construction on single-family residences struggles to recover following last decade’s market crash.
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