Why Twenty-Somethings are Becoming Ideal Long-Term Renters

January 27, 2014


Erin Hooper

Rent Manager on Laptop

If you take a good look at today’s twenty-somethings, you’ll see a less-than-optimistic group. This group is paying not only for the previous generations’ economic oversights, but a staggering amount of student loan debt as well.

According to Laurie Goodman, center director for the Housing Finance Policy Center at the Urban Institute, educational loan debt levels have risen from $221 billion in 2003 to nearly over $1 trillion in 2013.

Most who fall in the early-twenties to early-thirties crowd, still want to become home buyers. But there’s a huge hole to climb out of. They’re saddled with student loan debt and poor job security in the face of past housing and economic bubbles.

A vast majority of this demographic is either underemployed or unemployed, which isn’t helping propel them towards homeownership, either.

According to Jed Kolko, chief economist for Trulia, “after a recession, lots of people don’t have the down payment. They can’t qualify for a mortgage and affordability is getting worse.”

Multifamily-unit starts designated as “for rent” grew to the highest level in 15 years last year, said Kolko. The fact that less than 10% of multifamily starts are for condos, opposed to 40% at the height of the bubble, indicates that we’ll see higher rental demand continue.

As a result, landlords have a positive outlook as more individuals rent long-term due to less affordability and student debt.

Photo credit: LendingMemo/Foter/CC BY

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