DALLAS—Axiometrics data show that the percentage of households that are renting has been increasing for most age groups since the housing bubble burst in 2007/2008. There is one significant exception, however, and renting among this age group has in fact trended steadily, although not dramatically, downward since the mid-2000s: the youngest adults among the millennial generation, those born in the late 1980s and early 1990s.
As Generation X gave way to Generation Y among heads of household under age 25, what was a leveling-off effect among renters in this age cohort turned into a gradual decline. “To be sure, part of the reason for this decline is attributable to the recession,” according to Dallas-based Axiometrics. “The lack of good jobs that have been created since the recession's end has not allowed millennials the opportunity to create their own renter (or owner) households.” The number of young people still living at home, therefore excluding themselves from either single-family home ownership or multifamly rental, since the Great Recession has already been discussed at length, Axiometrics notes.
“Young people are still having difficulty finding work or they are choosing not to work and either live with parents or go to college,” says Axiometrics. “This helps explain why renter household formation for the younger portion of the prime renter age cohorts is in decline.”
Conversely, however, renter ratios among all other age groups have been increasing. The most noticeable trendline is in the 55- to 64-year-old cohort. Axiometrics notes that the renter ratio for these working-age Baby Boomers has risen steadily since about 2001.
The reasons for this increase aren't entirely clear. The 55 to-64-year-old cohort “has not had an evident triggering event, such as the Great Recession was for the under-25 group,” according to Axiometrics. “The upward trend toward renting for this age group began long before the single-family housing bubble that saw homeownership rates for the 25-34 and 35-44 cohorts peak between 2004 and 2006.”
Axiometrics notes a dichotomy between renters by necessity and renters by choice. “Homeownership became unattainable for first-timers because of stricter lending guidelines or foreclosures, and economic hardship during the Great Recession pushed people out of the single-family market.”
Choosing to rent, rather than having no choice but to rent, has also moved people away from ownership. “These renters like the freedom to move frequently, if necessary, and they like the myriad choices today's apartment properties afford them in location, interior and exterior amenities, prices and social or cultural opportunities,” says Axiometrics.
Although "renter by choice" is a term that has most often applied to young people that either can't yet afford homeownership or prefer to rent as a lifestyle choice, it now applies to many older heads of household who have chosen this lifestyle as well. It's especially true, Axiometrics finds, among "empty-nesters" in the 55- to 64-year-old age group. The firm did not chart older age cohorts above 65 years in preparing this study, “because their ratios have not changed significantly over the years.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
