Apartment List recently released results from its inaugural Apartment List Renter Confidence Survey. The study drew on data from nearly 6,000 millennial renters (age 18 to 34) at a time when homeownership for Americans under 35 years old is at its lowest point in the history of Census recorded data dating back to 1984.
“Millennials are projected to be larger than the Boomer generation this year, and currently only 34.6% of Americans under age 35 are homeowners,” says Andrew Woo, Data Scientist at Apartment List. “The future housing decisions of millennials will have a major impact on the economy. While millennial homeownership rates are low today, our study found that nearly 3 out of 4 millennial renters (74%) plan to buy a home in the future. However, very few of those millennial renters plans to buy in the near term, with the majority expecting to purchase after 2018.” Key findings of the report include the following:
53% of Millennials who expect to buy homes plan to wait until after 2018, but age and marital status play a big role
- 74% of millennials (respondents ages 18 to 34) plan to purchase a home in the future. Only 9% of millennials expect to always rent and 17% are unsure
- While a large proportion of millennials plan to buy, only 25% expect to do so in the next two years and the majority (53%) plan to buy after 2018. Renters over age 35 plan to purchase much sooner than millennials, with 50% planning to do so within the next two years (see figure 1)
- Within millennials, we found that older millennials (age 25 to 34) plan to buy sooner than younger millennials (age 18 to 24) by a large margin: 54% of older millennials plan to buy within the next 3 years, versus only 37% for younger millennials (see figure 2)
- Marital status correlates strongly with timing to buy: 52% of married millennials plan to buy within the next 3 years versus only 41% for unmarried millennials. As millennials continue to push marriage out later in life, we could see the average age of millennials who own homes continue to increase over time (see figure 3)
- Older, married millennials expect to buy the soonest, with 58% planning to own within the next 3 years, which is nearly twice the rate of younger, unmarried millennials (30%)
Household income correlates to plans for homeownership within cities, as does education level
- On a national basis, household income of millennials did not correlate strongly with plans for homeownership. However, when we looked at plans by city, we saw a clear correlation between income and plans to buy: millennials making between $30,000 and $60,000 plan to buy at a 15% higher rate than those making less than $30,000, and those making over $60,000 have a 25% higher rate (see figure 4)
- Homeownership aspirations are strongly tied to education levels: more than 77% of millennial renters who have a college degree (2 year degrees, 4 years degrees, and technical degrees) plan to buy homes, versus 67% for those with high school / GED degrees, and 63% for those who did not complete high school.
- Millennials with graduate degrees have lower plans to buy than those with 2 or 4 years degrees (72% vs 77%) (see figure 4). This outcome may be driven by the burden of student debt.
Expensive cities have lower plans for homeownership; expectations vary widely by geography
- Metropolitan areas showed wide variance for plans to buy: Cincinnati (85%), Austin (82%), Denver (81%), Atlanta (81%) and Washington DC (79%) rank as the top metros with millennials who plan to buy. San Jose was the clear lowest ranking metro with 53% followed by Virginia Beach, Saint Louis, and Miami all tied with 66%. Other notable cities in the bottom quartile include San Francisco (67%), Boston (67%), and New York (68%), which are also some of the most expensive cities in the nation.
- We found significant variation in homeownership plans on a state by state basis: Idaho millennials rank #1 with a whopping 95% indicating they plan to buy followed by South Carolina (92%) and Maine (90%). States with the lowest intent to buy include Arkansas (59%), Oklahoma (62%), and Arizona (64%)
- Among larger states, Texas leads the way with 78% planning to buy, followed by Illinois (77%), Florida (71%), California (70%), and New York (68%)
- See Chart 1 and Chart 2 for full data on plans for future ownership by states and metros
“Given the size and growth of the American millennial population, it is critical for city and state leaders to understand the homeownership aspirations of this large demographic,” says Andrew Tam. “Data from our Renter Confidence Survey suggests that cities that foster positive local economic growth, provide safe environments, and create access to recreational opportunities have a better chance of attracting millennial renters and encouraging homeownership.”
Chart 1: List of States by Millennials’ Plans to Buy
|Rank||State||I plan to eventually buy a house or apartment.||I expect to always rent.|
Chart 2: List of Metropolitan Areas by Millennials’ Plans to Buy
|Rank||Metropolitan Area||I plan to eventually buy a house or apartment.||I expect to always rent.|
|2||Austin-Round Rock, TX||82%||0%|
|5||Atlanta-Sandy Springs-Marietta, GA||81%||8%|
|6||Riverside-San Bernardino-Ontario, CA||80%||4%|
|8||Tampa-St. Petersburg-Clearwater, FL||79%||13%|
|9||Minneapolis-St. Paul-Bloomington, MN-WI||78%||8%|
|10||Kansas City, MO-KS||78%||4%|
|12||Dallas-Fort Worth-Arlington, TX||77%||5%|
|17||Houston-Sugar Land-Baytown, TX||75%||7%|
|18||Hartford-West Hartford-East Hartford, CT||75%||11%|
|19||San Antonio, TX||74%||9%|
|22||Los Angeles-Long Beach-Santa Ana, CA||73%||11%|
|25||San Diego-Carlsbad-San Marcos, CA||71%||8%|
|26||New York-Northern New Jersey-Long Island, NY-NJ-PA||68%||10%|
|29||San Francisco-Oakland-Fremont, CA||67%||13%|
|29||Milwaukee-Waukesha-West Allis, WI||67%||17%|
|31||Miami-Fort Lauderdale-Pompano Beach, FL||66%||17%|
|32||St. Louis, MO-IL||66%||12%|
|33||Virginia Beach-Norfolk-Newport News, VA-NC||66%||11%|
|34||San Jose-Sunnyvale-Santa Clara, CA||53%||24%|
ApartmentList.com surveyed 18,682 renters across the United States of which 5,844 self-identified as being age 18 to 34 years old. The survey asked questions about renter plans for homeownership and satisfaction with cities such as:
- In the future, which of the following is closest to your plans? [I expect to always rent. / I plan to eventually buy a house or apartment. / I’m unsure.]
- Based on your personal situation, how soon do you expect to be buying a home?
- On a scale of 1 to 10, how likely are you to recommend your current city or neighborhood to a friend or family member, with 1 being extremely unlikely and 10 being extremely likely?
ApartmentList.com evaluated cities and states against one another along multiple metrics. A detailed report explaining the survey’s methodology is available at the following link: https://www.apartmentlist.com/survey-methodology-paper-2015.pdf.
About Apartment List
Apartment List is the fastest-growing apartment rental marketplace in the United States, and is reinventing the rental market on a foundation of trust and transparency. Headquartered in San Francisco, Apartment List was recently named the #3 fastest growing company in the Bay Area and raised capital from an incredible team of investors led by Matrix Partners.