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Bad news for the rental market: Millennials have finally started buying homes
Homeownership increased to 63.9 percent during the third quarter
Sorry, apartment landlords, but it looks like millennials are interested in settling down and buying houses after all.
According to the U.S. Census Bureau, homeownership rose to 63.9 percent in the third quarter of the year, the highest rate it has reached since 2014, the Wall Street Journal reported. This is partially due to millennials hitting that age where a house and a family start to seem more appealing than an apartment and a fledgling improv career.
The growing homeownership rate could bring an end to the strong rental market, with American Homes 4 Rent having already reported disappointing growth in revenue for the third quarter. The supply of rentals has also shot up, with the seasonally adjusted rate of apartments under construction hitting 596,000 in September, almost double the long-term average of 300,000.
However, some investors in multifamily buildings still feel good about their market since the pace of housing construction is still slower than the pace of household formation.
A recent National Association of Realtors report found that 83 percent of millennials who don’t own a home say student debt is the reason, while a study from Apartment List found that only 44 percent of millennials can afford New York City’s median rent of $1,802. [WSJ] – Eddie Small