As you consider the options for investing in real estate, keep in mind that Millennials are currently the largest rental demographic. Although older generations typically purchase homes at a relatively young age, many Millennials make different decisions. From a rental investment standpoint, that’s a critical factor.
The number of renter households in America reached a record 45.2 million, growing by 1.9% in the second quarter of 2024 [1]. However, the number of homeowner households grew by just 0.6%, the smallest increase since 2022. This gap, particularly among younger millennials, indicates that renting is still a significant option for many in this demographic.
Why Do Millennials Prefer Renting?
Several factors explain the millennials, especially younger millennials preference for renting over buying:
Economic barriers: Interest rates on home loans have been high, inventory is low, and competition is fierce, which has driven up prices. That makes it difficult for Millennials to enter the market. Inflation and student loan payments are also limiting factors.
Lifestage milestones: Since Millennials tend to marry and have children later, this delay also pushes back their investment in real estate. Renting provides the flexibility they need while they work out their long-term plans. Millennials prioritize homes that fit their lifestyle, placing more emphasis on location, flexibility, and experiences rather than long-term homeownership.
Changing interests and needs priorities: Many Millennials have specific must-haves and ideas about how they want to live. They value nearby amenities like fitness centers, swimming pools, and tennis courts more than owning a house or a large property. Some are more interested in travel than other generations and don’t want to be tied to a mortgage for 30 years.
How Can Real Estate Investors Take Advantage of Millennial Demand for Rental Homes?
Every situation requires due diligence. By examining the data, real estate investors can carefully consider Millennials’ needs in rental homes. That can vary based on other demographics, of course, but a few key factors include the following.
Modern amenities and upscaled features
Millennials want access to more on-site amenities. Even if renting a single-family home, they typically look for walking trails, playgrounds, swimming pools, fitness centers, parks, and clubhouses. Many also want the specialized features they need, including high-speed internet and smart tech. Properties that incorporate these features tend to be more attractive.
Energy-efficient features
From the kitchen to the laundry, many Millennials appreciate cleaner living. That means lower carbon footprint lifestyles with more energy-efficient appliances. Millennials expect the properties they rent to offer a comfortable living space that respects the environment.
Pets are a must
For many Millennials, a pet-friendly location is a priority. For property owners, that may be a concern, but requiring pet deposits can minimize some of the risk.
Growing families
Although Millennials tend to wait until they’re older to have children, many already have families, or their families are growing. That means offering larger rentals with two or three bedrooms or more rather than studios or one-bedroom apartments. Many also need space to work from home. That could mean dedicated office space or bedrooms to accommodate an office or expanding family.
Ark7 has just launched SoCal-S18, a 4b3b single-family home designed to appeal to millennials seeking spacious rentals. It offers cost-efficient features like an open floor plan, solar panels, and a tankless water heater, along with community perks such as a pool, dog parks, and BBQ areas—perfect for millennials families.
When considering your next rental property, keep Millennials in mind. They may be the largest generation ever to not only rent but to remain in those renters long-term, promising lucrative returns in the right circumstances.
[1] Redfin
