Earlier this year at the NMHC Apartment Strategies Outlook Conference, industry experts gathered to discuss a wide range of topics around the multifamily market, including the trends driving the sector.
At the conference, Kim Betancourt, director of economics and multifamily research at Fannie Mae, noted that job growth and millennials are two key factors propelling the demand for multifamily.
What is it about Millennials that’s impacting multifamily?
The Federal Reserve recently released a report that showed near record levels of debt among young American adults. Millennials are feeling the financial burden of student loan debt, contributing to a decrease in home ownership and an increase in renting.
An even bigger impact than debt on the demand of multifamily is urbanization. In a recent write up in The Investor, JLL writes that millennials are leaving rural areas for the big city, and since 2000, rural counties have lost 11 percent of their prime-aged workforce to cities and suburbs.
Just this week, CBRE released new research on how the rising age of first marriages is a major contributor of the high multifamily demand in recent years. CBRE found that from 1960 to 2018 the average age for first marriages rose seven years for both men and women. According to NAR’s 2018 Home Buyers and Sellers Generational Trends Report, married couples are the household type most likely to purchase homes and compose 66% of all homebuyers.
The multifamily segment is meeting these generational demands with new accommodations like coliving. Coliving is a fairly new concept where residents with common interests and values share a living space and are encouraged to interact and work together. The coliving sector is growing and attracting more investment than ever. This past fall, Property Markets Group announced that its multifamily housing division, X Social Communities, has 10,000 coliving units planned nationwide.
According to Fannie Mae’s Kim Betancourt, Millennials will peak in 2025, but will still have momentum after. With a different set of values and behaviors, it will be interesting to see how the generation after Millennials, Gen Z, will impact the commercial real estate industry.
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