In March, the U.S. Census Bureau Housing Vacancies and Homeownership report revealed that the homeownership rate for 25 to 34-year-olds has increased from 36.5% in Q4 of 2018 to 37.6% in Q4 of 2019 (CoreLogic). This age group, also recognized as Millennials, are actively changing the housing market as a whole and has quickly become the fastest-growing segment of home buyers. Millennials continue to enter the housing market in greater volume and handle it in a unique way compared to generations of home buyers before them.
Millennials differ from any other generation right now in the sense that countless are considered to be at the beginning stages of their adult career and life. Because of that, they tend to have varying living arrangements. Due to student loan debt, fluctuating wages, and additional barriers, the majority of millennials are reluctant to jump right into the housing market. Several are looking for ways to either build up their savings or find a place that has the most bang for their buck. On top of this, many are in search of the perfect home and have no intention of settling down until it is found. With a longing for up-to-date technology and a prime location, this group is rather particular about their investments. As of now, individuals within this demographic typically lean towards residing in rental properties as opposed to rushing into the commitment of a mortgage, closing costs, home insurance payments, and property taxes. Rental properties leave more room for flexibility, opportunity, and adult-like responsibility without the hidden costs of homeownership.
Investors may be eager to indulge in the rental real estate market since it is a hot commodity, but knowledge of the markets and patience are important factors when finding the best place to invest your money. Real estate investors often look for Single-Family Rental properties that also provide a quick return because, they too, want the most bang for their buck. By jumping into a market without doing proper research can lead to a huge downfall. For many, real estate can be a good source for cash flow, appreciation, or a balance of both of these investment strategies.
Today, there is significant demand in the rental market, however, affordability and supply can fall short in the most sought-after markets. For investors, this means focusing heavily on any potential opportunities that may arise. The markets that are likely to be most attractive to renters are places where people feel as if they are getting the most for their money without things being too expensive. These consist of locations with a thriving economy, endless employment opportunities, future development, and a variety of resources. As time goes on, another key component that the best real estate markets have in common is technology. According to Fortune Builders, Orlando, Florida, Huntsville, Alabama, Austin & Dallas, Texas, and Raleigh-Durham, North Carolina rank among some of the highest rental markets in 2020 because of all that they have to offer their residents (FortuneBuilders).
Overall, there are several desirable factors and indicators that assist investors in choosing the optimal location. One of the most vital factors to keep in mind for both the investors and tenants is the balance between affordability and opportunity not only for now but also for the future. Ultimately, it is up to the investor to identify the emerging markets and trends as well as acknowledge pivotal deals to make the most of this ever-growing space.