As Millennials Age, So Do Their Renting Preferences

While a large share of millennials still lives with roommates, this age group is beginning to move out on their own or starting families as they age.

Millennials Living Arrangements across Asset Types

Following up on our previous blog, we continue to explore age cohort differences across renter living arrangements.

Young adults (Millennials and Gen Zers, 18 years and over) form a significant share of U.S. rental demand, especially in multifamily. They comprise half of all adult renters in small apartment properties and about a 43% share in large apartment buildings.¹

At the same time, their living arrangements differ from the rest of the renter population. A higher proportion of this age group lives in shared accommodations.

As shown below, nearly 24% of all young adult renters lived in non-family households. This compares to only 16% for all adult renters. Conversely, a lower share of young adult renters lived alone (12% compared to 20% overall).

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These differences vary significantly across rental asset types. Multifamily properties contain higher shares of young adults with roommates and living alone.

As depicted below, around 30% of Millennials and Gen Zers in small and large asset multifamily lived in non-family households. For the age group, 18% to 22% lived alone, and 26% to 28% lived in married-couple households.

Renters Living Alone and Married Couples on the Rise

As major players in the post-crisis urban resurgence, young adults looking to start families are unsurprisingly living in apartments longer. This is largely because making the transition to ownership has been out of reach for them.

As shown below, young adults living in married-couple households increased their share in small asset multifamily by around 33 basis points (bps) over 2015 to 2017. The shift is even more sizeable in highly amenitized, downtown-oriented large asset multifamily, where young couples increased their share by 189 bps.

(Please click around for detailed chart information)

The share of those living alone, generally having only a single income, increased by 66 bps in the more affordable small properties. The increase was only 35 bps in comparatively expensive large properties.

Interestingly, young adult renters living alone and in married households increased their share in duplex-quadruplex units, an asset class often overlooked, over 2015 to 2017.

The changing face of multifamily household composition presents new growth opportunities for property managers and operators. While homeownership remains challenging for many young Americans at the beginning for their careers, preference for urban lifestyles remains an important factor in continued rental demand from this cohort.

1 All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error.