With the year ending on a relatively positive note, many property managers might be worried about what the coming year is going to hold. Here are certain important predictions by the top experts regarding rental properties.
Increase in Demand for Rental Properties
While demand for rental units is expected to increase next year, the main demand will be for apartments. This is because many Gen Y members are not eager to start families and therefore are not going to need starter homes. According US Census Bureau the normal level of new households is around 1.1 million, but only 746,000 new households were formed last year.
This indicates that it now takes much longer for Americans to complete various rites of passage such as marriage, starting a family, buying a house, and so on. Secondly, the new generation has seen the despair and bankruptcy people had to endure because of the housing collapse, and they do not want to rush into owning a home.
Additionally, it is much tougher now to acquire a mortgage, since the qualifying process is more stringent because for many years banks were forced by the federal government to authorize loan giving to people that should not have been qualified to live in that home. Most of the young crowd has a huge debt to income ratio, since they will be repaying student loans with income from part-time or temporary jobs. Hence, hardly anyone seems to be eager to become a homeowner, and therefore there will be increased demand for rental properties.
Major Demand will not be in the Metros
Most of the millennial crowd is not seeking to make it big in the top cities. Rather they prefer working and living in areas that have lower cost of living. Secondly, telecommuting has increased dramatically in the past couple of years, which makes it easier for young professionals to visit offices in metros occasionally, since they can deliver their work digitally most of the time. Therefore, all these reasons will contribute towards more demand for rental properties in smaller cities rather than big city metros.
Renters will Prefer Walking
Renters are choosing to bike or walk rather than drive a car over long distances. This means renters are looking for neighborhoods that will satisfy most of their needs within walking distances. This trend had started last year and is likely to continue in the next year as well, but falling fuel prices might mute the full effect.
Older People Prefer Renting
In the past, most people who raised children would stay on in their paid for homes, after their children had left. However, recently this trend has changed, and empty nesters are preferring rentals rather than living in the same home they have been living in for so many years. Secondly, these people are in the age group of 50 to 65 and not very old. These couples are also much more active and healthier, and they like to live in happening & vibrant communities rather than dull suburbia.
Many such people are moving to places where there is more scope for recreation and meeting other people. This trend has mainly developed due to changing lifestyle choices. However, many people have been affected by foreclosures and divorce, as well. Whatever, may be the reason, elder people will also be driving up the demand for rental units.