Gen X Renters Still a Critical Component of Multifamily Demand
Although smaller in share compared to the Millennials and Baby Boomers, Gen X renters are critical to apartment household formation. Relative to other age groups, more Gen X renters are likely to form households with higher incomes.
Gen X Renters and Household Formation
First off, let’s define Gen X, the demographic cohort that follows the Baby Boomers. Like all demographic cohorts, the age range tends to vary slightly depending on who you ask — start and end cutoffs range from the early 1960s to the early 1980s. For the purposes of this article, we are defining Gen X as those aged 37 to 52 years old at the start of 2016.
Coinciding with the rise of Millennial and Baby Boomer renters across all asset types, the share of ‘Gen Xers’ among apartment renters has been on the decline. As shown above, From 2010 to 2014, the share of Gen X renters in small asset (5 to 49 unit) properties decreased by 4%, while the share in large assets (50+ units) decreased 3.6%. That said, small assets have a larger share of Gen X renters than larger assets — 19.4% vs. 17.0% as of the end 2014.
Interestingly, Gen X has a greater impact on household formation than other cohorts, as they head a higher share of households in small buildings relative to their population share. As shown below, Gen X headed 28% of all small asset households in 2014, compared to only 20% in large buildings.
This is consistent with our previous observations, which found that small asset buildings include a greater share of family households with children, which are primarily headed and supported by Gen X householders.
Gen X Household Income
Additionally, apartment households headed by Gen X individuals have higher average incomes across both small and large asset buildings. As shown below, the average income of small asset Gen X households of nearly $50,000 in 2014 was higher compared to the average for all small asset households at $43,000.
This difference was wider for large apartment buildings, where Gen X households made $73,000 compared to the average of $52,000 across all large asset households. With higher incomes and greater household formation rates, Gen X are critical to the stability of the small asset market.