Millennial and Gen-Xer Renter Demographics
Before you purchase or renovate an investment rental home in the Albuquerque and Rio Rancho markets keep the renter demographics mind. Most single family home rentals are to millennials and Gen-Xers. The 24-34 year old group has a different outlook toward rental homes than the past two generation. Well-documented, this group, comprising the oldest millennials and very youngest Gen-Xers, are starting families later and still must repay college loans and face stricter mortgage-underwriting guidelines. They view the benefits of homeownership differently and are much more mobile. They also remember the effects of the great recession and housing bubble on their parents and older siblings. This has tarnished the “Home of Your Own Dream” of the past and they are very cautious of long term housing commitments.
This age group is confident, connected, tech-savvy, multitasking and high achievers. They were also more tightly scheduled as children than prior generations – think youth sports, music lessons, full-day kindergarten, etc. – and want some sort of fun activity during their off-work hours. Millennials are not interested in taking on home improvement projects or spending off-work hours on yard and home maintenance. They spend much less time inside their homes and more of their leisure time going to and participating in organized activities around town than other generations. They want a rental home that is maintenance free, has modern appointments, with most rooms light and bright, and they want it move-in ready. This group is not interested in paying less rent for a home that may need repairs or looks dated.
Live Work Play
Studies have shown, most millennials prefer the instant gratification of a new looking home. They also do not want to spend a long time commuting. That is why millennials in large urban areas prefer a “work-live-play” environment that promotes the Class A, urban-core apartment properties that have been growing along skylines across America, according to Axiometrics’ apartment market research. Smaller cities, such as Albuquerque and Rio Rancho, that do not have long commutes to the urban scene and recreational activities, continue to attract this group of renters to single-family home rentals. Often the main motivation for choosing a rental home over a luxury apartment is owning a pet dog. There are many newer rental homes in the Albuquerque and Rio Rancho markets within 30 minutes of the city centers. These types of homes rent at premium prices with less vacancy.
Millennials are not buying their own homes at historical rates and this trend is expected to continue for the next few years. The homeownership rate for the ages 25-34 age cohort was 40.4% in 2014, compared to the 20-year low overall rate of 64.5%. As more millennials graduate from college and join the workforce, the cohort’s homeownership rate is forecast to fall below 40% through 2017, then rise to 41.7% in 2020 – still more than 300 basis points below the long-term average.