The multifamily market remains strong for a number of different reasons. One major one? The shifting preferences of key demographic groups.
As the largest living generation in the U.S., millennials represent a critical component of the multifamily market. An Urban Institute report states that homeownership among millennials in 2018 was 8 percentage points lower than baby boomers and Gen Xers, despite a slight uptick in 2018. While millennials now have wage growth, large student debt burdens have stunted their ability to purchase a home. Lifestyle preferences such as delaying marriage until later in life have also decreased household formation among this cohort. According to Gallup Analytics, significantly more millennials are currently single than what was true for those in older generations, stalling interest in homeownership.
In addition to millennials, baby boomers are also shifting away from homeownership. Baby boomers are settling into their retirement years and looking to downsize from their homes and move into senior assisted-living communities or apartments that require less work to maintain. A study by Fannie Mae’s Economic and Strategic Research group indicates that departures by older adults from the homeownership market will accelerate as the generation continues to age.
Tight finances and lifestyle preferences have redefined real estate trends in the U.S. As millennials and baby boomers continue to age, the demand for multifamily will continue to rise.
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Walker & Dunlop is one of the largest multifamily lenders to property owners.