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When I started planning for a shift in the Harvest Properties Group's strategy, for Real Estate Investing, I originally keyed in on Millennials and the trends associated with their demographic. Research led me straight to Apartments and MultiFamily Real Estate. One of the key indicators was the debt Millennials carry.
For US generation, in the 19 to 29-year-old age group, their debt exceeded US$1 trillion at the end of 2018. The highest level since 2007. This level of debt among Millennials is contributing to a decrease in homeownership and an increase in renting. Young Americans aren't able to bring the downpayment needed to purchase a home. However, debt is just one of the factors here.
Millennials also want freedom and flexibility when it comes to where they live. They don't want to be tied to a single area in the event that they want to move or change jobs easily. Many young Americans have work place flexibility, ie- remote jobs, and can live wherever they'd like. This makes for a very mobile generation. Home ownership can limit that mobility.
Urbanization is another factor. Millennials tend to target cities. Since 2000, rural areas have lost more than 11 percent of the 22-35 year old population to cities and their surrounding areas. Rental demand in cities, as a result, is booming. Additionally, Real Estate prices in these areas is also booming. Remember that debt issue we discussed earlier? With prices booming and Millennial debt at an all time high the likelihood of purchasing a property, for them, becomes less and less. Home ownership rates continue to shrink and show this effect.
While researching Millennials and their trends pointed us towards Apartments and MultiFamily properties what we did not expect was the impact that was also coming from the 65+ population. This demographic is also placing demand on the same space! In the next 10 years there will be more Americans over the age of 65 than there are under the age of 18. This influx of retirees and empty nesters will be looking to downsize and will also be looking for freedom and flexibility. They will look to be closer to cities in order to ensure they have everything they need.
What does this all mean for investors? The potential for a booming rental market is real!! As in REALLY GOOD!! Investors focused on the rental market will do very well and benefit from these two very significant age groups and their impact on the US Real Estate market.
If you're looking for a great place to invest, in real estate, you can't do much better, over the next 5-10 years, than in the Apartment and MultiFamily space.
Harvest Properties Group has done the homework and is well positioned to capitalize in this area.