Out with the old, in with the new. It is undeniable that each generation has affected the shape of the market differently in its era. Thus, with the Millennials overtaking the market, and with the unfolding of the new generation leaf, Generation Z, marketers have lots of things to consider. So, why are many renting over buying a home?
Businesses should know how to approach their consumers. With this said, it is crucial to understand how the new generation thinks when it comes to buying necessities and how they perceive expenses.
As you delve deeper into this article, you will find out why the newer generations, both Millennials and Generation Z, are often finding an apartment over buying a home.
How a Generation Affects the Market
It is not a secret that the market currently caters to the Millennial age group, with the demand for apartment homes skyrocketing over the past years. Millennials, especially the ages between 25-39, take up 12.3% of the 16% that prefer renting over buying a home. This data is according to the U.S. Apartment List Survey of 2019.
On the other hand, Generation Z has yet to take over the market. Generation Z’s current age bracket ranges between 4-24 years old, which will soon be considered as prime-renters. However, current studies show that this generation has its eye on homeownership, yet opts for an apartment due to its affordability and financial challenges like student loans.
In conclusion, one can say that Generation Z may pose a potentially competitive market due to its perceived goals. However, you can also say that both generations highly favor renting over buying a home due to affordability.
And to the newer generation, apartments can accommodate their needs compared to having a house of their own.
Apartment vs. Buying a Home
So, what other things does the newer generation find in apartments that make it high in demand? Written and discussed below is a list of advantages that apartments have to the current generation.
The affordability of homeownership is the biggest obstacle for Millennials, as per Apartment List’s research and analysis. Thus, this tells us that this generation prefers apartments over standard houses, a type of accommodation that Generation Z also seeks.
The price of a standard house is the top reason why the mentioned generations prefer to rent an apartment rather than owning a home.
The root cause of the newer generation’s preference for cheaper accommodation is student loans. These loans put these people deep in debt, which can put a big dent in their bank accounts and credit scores. Thus, it is no surprise that they prefer monthly payments rather than spending a one-time shot down payment.
In addition to this, renting is perceived as more frugal than owning a home. It is due to the dramatic increase of expenses in closing costs, home insurance payments, and property taxes in homeownership that makes Millennials back down from it.
Keeping Up with the Upkeeps
Home maintenance, yard work, repairs, upkeep, you name it, there are lots of things and money to consider when you own a house, not to mention other expenses such as utilities and other bills.
However, when you are renting, you can entirely let your landlord or the property management do the upkeep as a tenant of their building.
For millennials, the time and money spent on the expenses caused by home maintenance can be taxing. This new generation loves having their leisure time and saving the funds left from their income. Thus, the demand for apartments is currently high in today’s real estate market.
Move as You Please
In today’s working environment, more jobs demand traveling from one area to another, even overseas. Because of the current working environment, Millennials desire to move to a more desirable neighborhood whenever they see fit. One can say that rather than being tied down by a house mortgage, this generation loves to come and go as they please.
Since apartment houses today caters to various renters, property developers have skilfully planned and created an ideal niche for the consumer’s demand. An apartments’ imperative location, along with its world-class amenities, has now become a significant factor in the consumers’ attitude towards choosing apartments.
Apartments that offer more lifestyle options like fitness centers, swimming pools, community clubhouses, and other entertainment facilities, allow its renters to fulfill their needs efficiently and conveniently.
Not only that, but it is also cost-efficient when it comes to commuting since apartments are strategically placed in locations that can cater to the consumer’s needs.
Millennials have changed the real estate market demands drastically. Some are buying into the American dream but many are keeping their options open. Going forward, we’ll see if things continue down this path. But for now, many of today’s young people are choosing apartments over buying a house.