The Evolution of the America Dream. A growing “Rentership” Society…
Now may be a great time for investors who are interested in buy and hold rental properties. Rentals seem to be the wave of the future, as the American dream evolves.
Millenials: they were born between 1982 and 2004, and they are 80 million strong. They are also at the age their parents and grandparents were when they bought their first home.
And, many are not buying homes; they are renting.
Baby Boomers and Gen Xers typically got married in their early 20s, bought their first home in the suburbs, got a 30 year fixed mortgage, and then worked to pay it off.
Buying a home happened once, or maybe twice, in a lifetime.
Millenials, on the other hand, tend to leave their hometown after school; young professionals today are likely to take a job in a big city- or anywhere in the world for that matter. And, the long-term job, with promise of a pension following retirement, has all but disappeared.
Recent US Census Bureau data shows that the homeownership rate has declined by more than 7 percentage points, for 25 to 34 year olds, since 2006. Meanwhile, “rentership” has increased by more than a million.
Daniel Gross, economics editor at Yahoo Finance and author of the book Better, Stronger, Faster: The Myth of American Decline and Rise of a New Economy opines that this seeming transition to a rentership society “will unleash a wave of economic efficiency that could fuel the next boom.”
Gross goes on to say that a rentership society will induce vitality into the nation’s economy in a way that home ownership has not. The unemployed or underemployed are able to easily move to an area where their skills are needed- an option that would not be so easy should the individual be upside down in, or chained to, a mortgage. In fact, says Gross, economists have even discovered a correlation between “persistently high local unemployment rates” and higher rates of homeownership.
More and more people are beginning to “choose (themselves)”, opting to move away from traditional 9 to 5 jobs or careers, to become self-employed, build a business, or work remotely; the word “freelancer” doesn’t just apply to writers and web professionals anymore. In fact, in today’s digital world, people (and not just millenials) with varying professions that include every kind from real estate investor, to doctor or accountant, are able to work online. This, in turn, allows for them to choose to live wherever they prefer to live, be it the city, the coast, the countryside, the suburbs, or the mountains.
Will the economy improve, thus boosting millenials to the ownership lifestyle? Perhaps, but many economists like Gross believe that they will continue to move away from old expectations, choosing to live in such a way that allows for mobility, simplicity, liquidity, affordability, freedom, and flexibility.
Given these shifts, the implications for the demand for rentals in the years to come are impressive.