Throughout recent history, a mark of American status was the spacious home with the plush yard and picket fence. Young couples and growing families strove for this style of living to exemplify their status and enjoy what may be perceived as the American dream.Today, the home with the picket fence is no longer a goal for many. Most millenials and the new era of young families are opting for flexibility, mobility, maintenance-free lifestyle which can be found in multifamily. As mentioned in last week’s blog, We are living in a rental economy, 82% of renters affirmed that renting is the affordable option, and this trend is only growing.

Earlier this year, the WSJ confirmed in their article A Growing Problem in Real Estate: Too Many Too Big Houses that “Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell.” The same homes that were once sought after as a status symbol are no longer regarded as such. The article goes on to state that “Now, many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them.”

According to Fannie Mae’s report, The Coming Exodus of Older Homeowners, boomers’ homeownership is projected to decrease by nearly 30 million over the next couple of decades (see chart below). Across all demographics, we are witnessing a shift toward more practical living, multifamily. 

A few weeks ago the WSJ reported that “U.S. homeownership rate fell for a second straight quarter, as high prices and limited starter-home inventory are steering more households toward renting.”  This coupled with the fact that home prices rose over the last 2 decades while wages have remained stagnant (see chart below) confirms that we are living in a rental economy.

Although the economics of wages, home prices, and supply drive many hopeful homeowners into renting, others prefer renting for mobile flexibility, lack of debt, and access to amenities and advantages that they may not otherwise have in a single family home.

In Freddie Mac’s recent survey of renters and homeowners, 82% of renters stated that renting is more affordable for them (see chart below). This percentage has steadily increased from 69% in January 2016, further affirming the idea that the rental economy is here to stay.