You would have thought that with an improved job market, more millennials would move out of their parents’ homes earlier to rent their own apartments or buy their own homes. Apparently, that’s not the case. If a recent report by Pew Research Center is to be believed, then more millennials are actually living with their parents today compared to 10 years ago.
Titled “More Millennials Living with Family Despite Improved Job Market,” the report shows that 18-34 year olds now compared to 2005 head fewer households.
According to the report, headline unemployment among 18-34 year olds fell from 12.4% in 2010 to less than 8% in 2015. Also, the number of millennials currently not enrolled in college grew by nearly 5.4 million between 2005 and 2014.
Yet, in spite of all these positive economic indicators and the doubling of the millennial population between 2005 and today, there has been very little growth in the number of young adults starting their own households.
Different experts have come up with different possible explanations for this trend. Some say that the slow economic recovery from the Great Recession has had its toll on the quality of jobs on offer for these young adults. Others have even mentioned student debt and weak credit as well as lack of a “push” from more “tolerant” parents as possible factors.
A closer look at the Pew report indicates that most young adults are either still living with their parents or have “doubled up” with other roommates. Moreover, over the past 10 years, the population of non-student millennials has decreased by nearly 5.4 million. Yet, over the same period, the number of households headed by this age group has fallen by nearly 2.1 million.
For apartment owners and the real estate market in general, this should come as good news somehow. We all know that these millennials can only live with their parents or “double up” with roommates for so long. Sooner or later, they will have to start their own families and when that time comes, they will definitely come looking for an apartment to rent and a home to buy.
This age cohort is said to be the group most likely to rent an apartment. Statistics from the Pew research show that millennials currently outnumber both baby boomers and empty nesters in number of apartments rented. So, you can imagine that when they finally come knocking, they will create a very strong pent up demand.
Interestingly, more than 500,000 multifamily units were not built between 2009 and 2013 as should have happened. This means that if millennials had actually created households at the projected rate then demand for apartments would have been even stronger. So, you could as well say that the slow rate of household creation among millennials came just at the right time!
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