Five Outlooks on Renting Post-COVID, Straight From Millennial Renters
February 25, 2021
Millennial homebuyers dominate real estate news thanks to being the largest homebuying force in the country. The question for years has been: When will millennial renters start entering the market in greater numbers after putting off homeownership longer than other generations?
While more and more millennials have taken the plunge, particularly in the last couple of years, many continue to rent, and it's their perspective we’re offering on our blog today.
Previously, we profiled four millennial homebuyers from the HomeSphere office, and now we’ve got five millennial renters from our team to discuss why they’re still renting, if the pandemic has hastened homebuying plans, what they value most from their renting experience and more.
The basic stats on millennial renters
The latest numbers from the Census Bureau indicate that of approximately 123 million occupied housing units, about 44 million are occupied by renters. Of that smaller number, 34.4 percent are under 35 years.
Meanwhile, according to Apartment List’s 2021 Millennial Homeownership Report, 42 percent of millennials own a home by age 30. That compares to 48 percent of Gen Xers and 51 percent of baby boomers when they were that age. In the same report, the number of millennials who say they plan to rent forever is up for the third consecutive year, with 18 percent of millennial renters suggesting they’re likely to rent forever.
It’s hard to say if that attitude will persist into 2021, but anecdotally, our profiled renters are pretty across the board. So, let’s meet them. (All renters profiled live in or around the Denver area.)
Kelsey, 24. The happy renter.
Kelsey lives with her husband in a remodeled duplex in the Denver metro area. They’ve shared the one-bedroom place for about three years.
Why they chose the space: In-unit laundry was really important to us, and we liked how private the space is and how it’s in a safe neighborhood. It’s also got access to stores.
Most important features: Again, the in-unit laundry for sure. We also value it being pet-friendly and having one bedroom but also space for an office.
Least important features: The fireplace. It doesn’t work so it’s just for show and not necessary for us.
Upsides of renting: The ease of maintenance is nice — it doesn't have to come out of our savings if something breaks. The flexibility is also nice.
Downsides of renting: It’s tough knowing that I’m not putting my money toward something I can call my own. We also have to street park, which is tricky in the winter months with snow. Our unit also doesn’t have a lot of wall outlets which leads to us running extension cords all over the house. Plus, we only have two small windows in our unit since it’s garden level, so it can be dark.
Impacts of the pandemic: We’ve got a space that’s technically designated as an office, but we use it for a second bedroom, so I set up a little work area in our hallway. Some days I go a little stir-crazy wishing I had more room, and then other days it still seems like we have plenty of space to get the job done. We also don’t have AC, which was very apparent in the summer months. It’d be great to have a larger yard and AC.
Plans to buy: We’re not currently looking. My husband and I are both still paying off student debt and I’m not sure what we could afford while still staying close to Denver, which we really like (though we’re not sure if Denver will be our forever home). I grew up in the country, so to get anywhere you had to “go to town” and it’s convenient to have city life so accessible, but we’d love to own a few acres and that feels impossible in the metro area. We’re enjoying it for now, but when we do move on to the next place, I want another bedroom for more office space, an area for a home gym and more land.
Vanessa, 26. The looking-to-buy renter.
Vanessa has been renting her latest place in the suburbs for about a year. She rents a one-bedroom apartment that has a small patio area.
Why she chose the space: I was drawn to their gym and newly renovated pool, as well as how close it was to stores and shopping areas.
Most important features: My in-unit laundry is most important. I can do laundry when I need and want to — not on a schedule like other renters I know who don’t have in-unit laundry.
Least important features: My apartment is cozy and not too big, so every feature feels essential. I feel like everything was taken into consideration well by the developer.
Upsides of renting: I appreciate how if something goes wrong, I can simply call maintenance.
Downsides of renting: There are a bunch of rules about what you can and can’t do with the space, like paint color and a “no nails” rule, so it’s hard to really make the space my own.
Impacts of the pandemic: With the shutdown and social distancing, I haven’t even gotten to use the pool or gym. And being home all day, every day has shown me that I’ve outgrown my space. I’m regretting not getting the additional loft area which would’ve been a good space for an office.
Plans to buy: I’ve been looking at townhomes with the help of a real estate agent because I think that’d be a good starter home. Ideally, I’d love a large backyard and a bigger kitchen. I really love open floor plans too. I’ve rented up until this point primarily because of finances so that’s influencing what I’m looking for as well.
Mark, 36. The ex-renter with a growing family.
Mark currently lives with his wife and four children in a single-family rental in Denver, but not for long. They’ve shared the three-bedroom house for more than five years.
Why they chose the space: It was a good fit when we’d just moved here from NYC and only had two children. It’s got a huge backyard so that was a big draw, and the Denver market is always crazy so not much was really available.
Most important features: A big backyard for my kids to run around in.
Least important features: Nice appliances. If I were married without kids, these two features would probably flip, though.
Upsides of renting: It’s been a more affordable option for us and it’s nice to have the costs of maintenance covered. We’ve also been on a month-to-month lease, so it’s been more flexible.
Downsides of renting: We’re running out of space and we’d love to have more privacy.
Impacts of the pandemic: We haven’t felt any impacts of the pandemic too much in a negative way besides navigating work from home. However, as a result of the pandemic and the resulting CARES Act, I was able to withdraw money from my retirement account without any penalties so we could make a down payment. The low interest rates really helped as well.
Plans to buy: Yes! We just closed on a home that’s got better space for us. We immediately ruled out places that had too small of living spaces, were too close to neighbors, had a small kitchen or had bedrooms on different floors. While we plan to do reno work, it’s got a much bigger kitchen that opens out into the den because that was important to us too — to have a little bit of an open plan. A master bathroom was also key, so we don’t have to share it with the kids.
Homebuying process: We looked at about 10 to 15 houses in person which was kind of a pain because you have to get in and out in 15 minutes, and children aren’t allowed to come (due to COVID restrictions). We used virtual tours and 3D mappings of the houses we were interested in to get a sense of the space. We had considered renting a bigger house, but the interest rates were definitely something we wanted to take advantage of.
Adam, 28. The renter who used to own.
Adam lives with his fiancé and dog in a two-bedroom apartment in Denver that they just started leasing. Adam previously owned a condo in a different Denver neighborhood.
Why they chose the space: We only seriously considered two apartments when landing on our current one. We sold our condo because we didn’t like the HOA there, and we didn’t think it was a good long-term fit. This place has more amenities and space and less stress. Security was also very important. It was nice because we toured with a realtor friend and she knew all the right questions to ask.
Most important features: Kitchen quality. It doesn’t need to be big, but it needs to have nice appliances, counters and good cabinet space. Close second is storage, and I’ve learned that most people don’t think about the number of outlets. You don’t want cords running all over your home because the outlets aren’t conveniently placed. Safe, convenient and affordable parking is also nice.
Least important features: Communal spaces like business centers or lounges. A decorated lobby definitely brings value but sprawling common areas are rarely used.
Upsides of renting: I appreciate all the amenities from the gym to affordable parking, which we didn’t have before, to front-desk concierge service to our mailroom. It’s also nice that it’s not something we’ll be locked into forever, and we’re in a great area for shopping and restaurants. It’s also safe.
Downsides of renting: There’s no opportunity to gain equity or have that pride in ownership.
Impacts of the pandemic: As we were looking at apartments, we knew that we’d need a good set-up for working remotely. Our previous space was too open, so our two bedrooms now make it easier to work from home. Otherwise, the apartment has a generally open plan, which we’re fine with. COVID hasn’t really had a huge impact otherwise.
Plans to buy: Not at the moment. It’ll probably be a couple years before we think about moving again, and then it’ll be because of life changes.
Katherine, 33. The possible perma-renter.
Katherine lives with her husband in a two-bedroom apartment in a Denver suburb. They’ve lived in their current place for a little over a year, but previously rented in the same complex.
Why they chose the space: We’ve basically been gradually upgrading apartments for the past six years, and our current unit has huge windows with a ton of natural light, a nice, open kitchen and an actual laundry room which has good storage space.
Most important features: It’s not glamorous but storage space is so important. I'm not going to rent an ugly apartment because it has five closets, but it’s frustrating when you see this sleek space that isn't cheap and then there are a couple tiny closets for storage. Features that show thought for the actual living experience go a long way.
Least important features: I’m agreed with Adam on communal spaces that aren’t the pool or outdoor space. It’s nice to have a business center the one time a year we need a printer, but other than that we don’t use it at all, and we’ve definitely never used the indoor clubroom.
Upsides of renting: I like the freedom and low maintenance. There are no yard or plumbing issues to worry about. I also don’t think we could afford a home that has the same features like a big kitchen island, hardwood floors and modern, large windows. The pool is also nice when there’s not a pandemic.
Downsides of renting: It’s kind of a crapshoot who you’ll live above and below, at least in a large complex. We’ve only had one truly bizarre experience with a neighbor, but there’s always the chance you'll end up near someone unbearable. And while we don’t use 80 percent of the amenities, I know it’s built into the rent.
Impacts of the pandemic: The biggest thing has been working from home. My husband’s company is completely remote, so he’s got a nice desk set-up, but I’ve been working from our dining table. We’ve got the second bedroom to use but I like that as an exercise space. It hasn’t turned me off the open floor plan, but I definitely get the appreciation for private spaces.
Plans to buy: Not right now. We don’t want kids so a need for more space isn't an issue. I’d kind of love to move to downtown Denver, but we could only do that if we rented as I’m still paying off school loans. I think when we buy a house, it’ll be because it’s exactly what we want and has closer access to fun restaurants and all of that, which we’re definitely lacking now.
While not all renters are the same, we noticed some common threads here.
- Affordability is an important issue when it comes to why some millennials aren’t crossing the gap from renting to owning. That’s either a benefit for apartment owners to use or something home builders should address if they’ve got entry-level products (like collateral on how buying a home might be more affordable than you think or etc.)
- Walkability is still a big draw, despite the pandemic and all the theories that people want to move away from too-crowded areas (like downtown spots).
- Outdoor space is also a big draw. This has been on every list about changing consumer preferences and it’s easy to understand why. Large outside space may not be an option in every multifamily unit, but there's also opportunity for communal spaces, like courtyards, roof decks and more.
- While work from home won’t last forever, there’s an opportunity to add thoughtful built-in features for at-home workstations that won’t also greatly expand square footage.
- The open floor plan isn’t universally hated, pandemic or no, but private areas in addition to open areas seem to be greatly appreciated.
- The most appreciated features are often pretty basic like in-unit laundry, storage, thoughtful wall outlets, security features and mailrooms.
- More options to customize rented spaces could bring comfort to renters who want to feel like they are truly in their own space.
- One of the top pros of renting is the ease of maintenance. That’s good for both home builders (new products) and multifamily managers.
Let us know other perspectives in the comments.
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