Is Generation Y Driving Current Apartment Leasing Activity?
This week, MPF Research announced the U.S. apartment market’s performance in the second quarter of 2013, highlighting strong demand and rent growth despite an increase in households opting for home purchase.
MPF Research Shows Apartment Demand Up 69% in Q2
The biggest highlight for the quarter was demand outpacing deliveries. According to MPF, the market absorbed 88,524 apartments across the country’s 100 biggest markets. That absorption tally, up 69 percent from the second quarter 2012 volume, well surpassed the 33,291 apartments in communities finished during the April-June time frame.
“The big-picture story is that the apartment market has been essentially full since the middle of 2011, and that it’s continuing to remain full even as we add a significant number of new rental properties and cycle out some previous apartment residents to home purchase,” said MPF Research vice president Greg Willett.
What was causing leasing activity to soar despite an increase in households opting for home purchase in select markets? One factor was most likely Generation Y.
“Some of the pent-up apartment demand from young adults who have been living at home with mom and dad or in other combined-household situations is being unleashed,” said Willett. “The number of new apartment renters entering the market exceeds those exiting to make home purchases.”
Generation Y Prefers a Mix of Multifamily Housing Choices
The MPF data corroborates the findings from a recent Urban Land Institute survey called America in 2013: A ULI Survey of Views on Housing, Transportation and Community.
The survey results show that millennials have a penchant for urban-style living. About 60 percent say they prefer a mix of housing choices, along with proximity to shops, dining, offices, and transit. Seventy-five percent said they valued walkability — a preference that jibes with this generation’s declining number of licensed drivers, according to a report by U.S. Pirg, a nonprofit consumer advocacy group.
And you’re simply not going to find much of that in the suburbs.
However, Lynn Ross, the executive director of the Urban Land Institute’s Terwilliger Center for Housing said the findings didn’t necessarily mean this generation would move en masse to city locations. Additionally, there are plenty of housing choices currently available, says Willett. “We’re adding enough new households for all types of housing to experience momentum at the same time.”
More than half of the young adults surveyed by the institute are renting and of the 63 percent who said they planned to move within the next five years, nearly 40 percent expect to live in some type of multifamily housing.
While the effect of Generation Y on the apartment market is mostly speculation on my part, I’m curious to know what you experienced at your apartment communities over the past three months. Did you see a trend of younger renters in select markets or across the entire portfolio?