Rental demand soars as more millennials hold off on buying

[Yo_Mama_Been_Loggin]

In the D.C. suburb of Chevy Chase, MD, a massive apartment rental and condominium complex is going up, and apparently it can't happen fast enough. Demand for rental apartments in and near cities across America is soaring, just when most people thought it wouldn't be. The expectation was that rental demand would fall as millennials aged into their homebuying years.

Apartment demand in the second quarter of 2019 spiked by 11% from a year ago. That, in turn, pushed rents up an average 3% nationally to $1,390 per month, according to RealPage, a real estate software and analytics company.

"Demand is proving especially strong in this year's primary leasing season," according to RealPage chief economist Greg Willett. "Solid economic growth is encouraging new household formation, and rentals are capturing a sizable share of the resulting housing demand. At the same time, loss of existing renters to home purchase remains limited relative to historical levels."

Despite the increase, a record 82% of renters say renting is more affordable than owning, according to a new survey from Freddie Mac, up from 67% just a year ago.

https://www.msn.com/en-us/money/realestate/rental-demand-soars-as-more-millennials-hold-off-on-buying/ar-AAE2672?li=BBnbfcN

$1390 a month? I'm glad I bought when I did.

[Aristus]

1. Just another way young people coming up today are getting screwed.

In the long run, owning is more cost-effective than renting. But if one doesn't have the money for a down-payment, or even a well-paying job with long-term security, obtaining a mortgage is going to be a nightmare.

[CentralMass]

2. +1

[Doctor Howard]

9. For the working poor

home ownership remains a fantasy

[Tiggeroshii]

3. This millenial just bought.

Shortly after our rent increased from 1550 to 1700 in rwo months. We are paying a couple hindred more per month for the mortgage but the difference is that our mortgage wont increase like our rent.

[Yo_Mama_Been_Loggin]

7. our mortgage wont increase like our rent

Your property taxes will however. Likely your homeowners will too as the price of your home appreciates.

Still you'll probably beat the inflation rate on rentals and build equity at the same time.

[Tiggeroshii]

8. My property taxes are set with the latest assessment.

Unless we do something to get a new assessment, my understanding is that our property taxes will remain the same. And if not, it will likely mean the cost of high equity.

[progree]

4. "Solid economic growth" ... but what about faltering job growth?

In its 29 months, the Trump economy has created 810,000 FEWER jobs than Obama's last 29 months

and the pace of job creation has markedly slowed in 2019 ...

Summary: Average monthly net new jobs created
221,000    <- Obama's last 29 months
194,000    <- Trump's 29 months (February 2017 through June 2019)
172,000    <- 2019 so far (January through June)
144,000    <- Last 5 months (February 2019 through June 2019)

Most of this is from a Forbes contributor. It also checks out with the Bureau of Labor Statistics numbers

details: https://www.democraticunderground.com/111685907

[Amishman]

6. With unemployment this low, the raw number of jobs created isn't a good measure

He labor market is so tight in many places that employers are postponing hiring decisions. My current employer just canceled a major upcoming project as they can't fill the openings on my project and another ongoing project; let alone hire enough to stand up an additional team.

The craptastic level of wage growth on the other hand is an extremely good argument and something we need to be shouting from the rooftops

[progree]

10. On wage growth

Real (meaning inflation-adjusted) average hourly earnings of production and non-supervisory workers,
in 1982-1984 dollars
https://data.bls.gov/timeseries/CES0500000032

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016: 9.18 9.23 9.22 9.21 9.20 9.19 9.21 9.21 9.20 9.21 9.21 9.19
2017: 9.17 9.19 9.21 9.22 9.24 9.26 9.27 9.24 9.23 9.22 9.21 9.22
2018: 9.20 9.20 9.23 9.24 9.24 9.24 9.24 9.27 9.29 9.27 9.32 9.37
2019: 9.39 9.39 9.38 9.37 9.40(P)

No figure for June yet, because the June CPI hasn't come out yet.

Anyway, I don't have the figures to say that inflation-adjusted wage growth (or non-inflation-adjusted wage growth) has been particularly weak, although one would expect more in such a "tight" labor market.

The nominal figures (i.e. not inflation adjusted)
https://data.bls.gov/timeseries/CES0500000008

[progree]

11. Prime Age LFPR (age 25-54) is not all that strong compared to historically, is down from January

Last edited Fri Aug 2, 2019, 10:24 AM - Edit history (1)

http://data.bls.gov/timeseries/LNS11300060
(Graph is at the link, but the default is 2009 - 2019, i.e. the Great Recession years and beyond, one needs to adjusted the "From" date near the top center to see further back)

Prime Age Labor Force Participation Rate (age 25-54)

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1987: 82.2 82.3 82.4 82.5 82.6 82.5 82.6 82.6 82.6 82.7 82.6 82.7
1988: 82.6 82.7 82.8 82.8 82.8 82.6 82.8 83.0 82.9 83.0 83.3 83.2
1989: 83.5 83.4 83.3 83.3 83.2 83.2 83.3 83.3 83.6 83.5 83.8 83.7
1990: 83.8 83.8 83.6 83.5 83.5 83.4 83.4 83.4 83.4 83.4 83.5 83.4
1991: 83.2 83.5 83.4 83.7 83.4 83.4 83.3 83.4 83.4 83.4 83.4 83.2
1992: 83.5 83.4 83.5 83.7 83.8 83.9 83.8 83.8 83.6 83.5 83.5 83.4
1993: 83.3 83.1 83.2 83.2 83.4 83.6 83.5 83.5 83.4 83.5 83.6 83.6
1994: 83.4 83.5 83.3 83.2 83.3 82.9 83.2 83.3 83.6 83.5 83.6 83.5
1995: 83.5 83.6 83.5 83.7 83.5 83.3 83.4 83.3 83.5 83.4 83.5 83.4
1996: 83.5 83.5 83.5 83.6 83.7 83.6 83.9 84.0 83.9 84.1 84.1 84.1
1997: 84.0 83.9 84.0 84.0 83.8 84.1 84.3 84.5 84.3 84.2 84.0 84.1
1998: 84.0 84.1 84.2 83.9 83.9 84.0 84.1 84.1 84.2 84.1 84.1 84.2
1999: 84.6 84.4 84.0 84.1 84.1 84.1 83.9 84.0 84.0 84.1 84.2 84.0
2000: 84.4 84.4 84.3 84.4 84.1 84.1 83.9 83.8 83.7 83.6 83.8 83.9
2001: 84.1 84.1 84.1 83.7 83.8 83.6 83.6 83.5 83.5 83.6 83.5 83.7
2002: 83.5 83.7 83.5 83.6 83.6 83.2 83.1 83.2 83.3 83.2 82.9 83.1
2003: 82.9 83.0 83.1 83.2 83.1 83.3 83.0 83.0 82.8 82.9 82.8 82.8
2004: 82.8 82.7 82.8 82.7 82.8 82.9 83.0 82.7 82.7 82.6 82.7 82.6
2005: 82.7 82.8 82.6 82.7 82.9 82.6 82.8 82.9 82.9 82.7 82.7 82.7
2006: 82.8 82.9 83.0 82.8 82.8 82.8 83.0 82.9 82.9 82.9 83.0 83.1
2007: 83.4 83.2 83.2 83.0 83.0 82.9 82.9 82.9 82.8 82.7 82.9 83.1
2008: 83.3 83.2 83.3 83.1 83.1 83.1 83.1 83.2 83.1 83.0 83.0 82.8
2009: 82.8 82.8 82.6 82.8 82.9 82.9 82.8 82.8 82.5 82.5 82.4 82.0
2010: 82.4 82.3 82.4 82.6 82.3 82.2 81.9 82.0 82.0 81.8 82.0 81.9
2011: 81.7 81.6 81.7 81.7 81.7 81.7 81.4 81.6 81.5 81.3 81.5 81.6
2012: 81.5 81.5 81.5 81.4 81.4 81.5 81.4 81.4 81.5 81.6 81.2 81.4
2013: 81.1 81.0 81.0 81.0 81.2 81.2 81.2 81.0 81.0 80.6 81.0 80.8
2014: 80.9 81.1 81.1 80.8 80.7 81.0 80.8 81.1 80.8 80.9 80.9 80.9
2015: 81.0 80.9 80.8 81.0 81.0 80.9 80.7 80.7 80.6 80.8 80.9 81.0
2016: 81.2 81.1 81.4 81.2 81.1 81.3 81.2 81.3 81.5 81.6 81.4 81.4
2017: 81.5 81.6 81.6 81.7 81.6 81.6 81.8 81.7 81.8 81.6 81.8 81.9
2018: 81.8 82.1 82.0 81.9 81.8 82.1 82.1 82.0 81.8 82.3 82.2 82.3
2019: 82.6 82.5 82.5 82.2 82.1 82.2 82.0 <-added the July one on Aug. 2

(in the years before 1987 the prime age LFPR was considerably less because the female LFPR had not yet ramped up to contemporary levels)

All: http://data.bls.gov/timeseries/LNS11300060
Men: http://data.bls.gov/timeseries/LNS11300061
Women: http://data.bls.gov/timeseries/LNS11300062

[frazzled]

5. My family's millennials must not have gotten the memo

Because, oddly, just today I learned that my niece and her soon-to-be husband just put in a bid on a place, and that her brother (my nephew) just signed a contract on a house. My daughter and her spouse bought a first house in June. Three in the family who had been renters for fifteen years or so, just decided to take the plunge.

All of these kids are in their mid- to even slightly later thirties, which puts them on the older edge of the millennial generation.

That’s around the age my husband and I were when we were able to buy our first little house ( we had 2 kids by then). Interest rates back then were 8-9% (and salaries were far far lower), as opposed to 3-4% right now. So maybe things haven’t changed that much.

Millennials are also are marrying later and having children later, in addition to purchasing homes later. They’re growing up later, too, as reported in studies of the increasing age of “adulthood.”

Give the younger millennials time. In a few years, they will be looking to buy too, maybe.