Despite a recent uptick in the rate of homeownership among millennials, industry observers at the IMN Single-Family Rental Investment Forum West in Phoenix said the increase was not enough for them to change their bullish outlook on the single-family rental sector.
"There is some evidence that millennials are wanting to become homeowners and are actually becoming homeowners, but it is still a huge deficit compared to what we were seeing during the last housing boom," Daren Blomquist, ATTOM Data Solutions' senior vice president for communications, said during a panel discussion.
Citing U.S Census Bureau data, Blomquist noted that the overall single-family rental market was still good. The number of renters occupying U.S. homes is at a 51-year high, and the homeownership rate among Americans under 35 years old is 18% below the rate seen before the Great Recession.
"Which leads us to believe there's definitely legs left in marketing to or targeting millennials in your [single-family rental] strategy," Blomquist added.
Jason Hartman, owner of Platinum Properties Investor Network Inc., said that even though the homeownership rate is increasing among the largest generation of Americans, millennials' homeownership rate is lower compared to that of the Baby Boomers and other generational cohorts.
Millennials face a relatively anemic employment market, jobs with low wages and significant student loan debt burdens, Hartman said. He believes millennials will continue to favor renting over owning because their attitude toward renting is more favorable than that of previous generations. Many saw their parents lose homes or make short-sales and do not want to possibly relive those experiences.
"This is a generation that is saddled with huge student loan debt, they basically have a mortgage but they didn't get a house included with the mortgage," Hartman said, speaking on the panel. "Where are the big corporate jobs that Gen Xers and Baby Boomers had when they were the same age?"
Tina Mortera, vice president of marketing at privately held Progress Residential, one of the largest single-family rental companies, said 36% of the company's tenants are members of Generation X with older children and 22% are aging millennials with very young children.
Describing Progress' renter population, Mortera said the Generation X cohort carries an average of $27,000 in non-mortgage debt primarily related to education undertaken after the Great Recession to update skills in the wake of job loss. Regarding the company's millennial tenants, she said many have been priced out of owning homes in neighborhoods where the company rents to them, she added.
Bruce McNeilage, co-founder of Georgia-based Kinloch Partners LLC, a company that develops homes for sale and owns single-family rental homes, mostly in the U.S. Southeast, said he did not see homeownership rates among millennials reaching the levels of prior generations and that the overall rate would continue to decline.
McNeilage lamented his observation but admitted that the single-family rental sector stood to benefit.
"The death of the American dream in my opinion could be the greatest societal failure of our generation because that's what people use to retire to Florida or send their kids to college by taking a second mortgage," McNeilage said. "But it's going to be an absolute boom for our business for many, many years, and my philosophy is that if I can't sell you the American dream, I'm going to rent it to you."