Racing to Rent: How Millennials are shaping the rental market
According to research from Urban Institute, only 37% of Millennials between 25 and 34 are homeowners. That’s 8% lower than both Gen X and Baby Boomers at the same age. Data from Pew is even starker, putting Millennial homeownership at 22% versus 34% for Gen X and 35% for Baby Boomers.
A number of factors have driven this shift. On the more negative end of the spectrum, the lingering impact of the Great Recession and high student debt balances have led Millennials to buy later. The resulting increase in borrower requirements by mortgage lenders following the Great Recession, as well as the decision by many Millennials to delay marriage, have continued to contribute to this shift.
At the same time, many Millennials are choosing to rent longer. They see advantages in the flexibility offered by renting — including greater mobility, lower maintenance costs, and lack of mortgage debt. Many not only rent because they struggle to qualify for a mortgage, but also because they believe renting is the better option.
Either way, it is estimated that by age 30, Millennials spend almost $100,000 on rent. For many, this cost is prohibitive: 45% of the generation is rent burdened, spending ~45% of their income on rent — much higher than the recommended 30%. In many cases, the generation’s historically low savings exacerbates this challenge. A 2017 GoBankingRates survey found that “young Millennials”, those between ages 18 and 24, have less than $1,000 in their savings accounts. Even more astonishing is the rise of Millennials with $0 in savings — up to 46% from 31% the prior year.
As Millennials continue to rent, and will continue to rent for longer periods than previous generations, they are bringing their needs and preferences to the market. The generation that grew up with technology available at all times is now increasingly turning to technology and innovative solutions to improve their rental experience. According to Pew, 92% use smartphones and 90% view the Internet as having a positive impact on them personally — proving that there is ample opportunity to introduce Millennials to rental technology.
That’s where we come in. Solutions like Lease Guarantee and Security Deposit Replacement can help Millennials save money on rent while saving money for a home. Our renters’ insurance compliance platform uses technology to make it easier to get insurance coverage. As a result, we help put a bit of money back in their pockets for rent or other costs.