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The 65+ cohort’s domination of the increase in multifamily demand
largely stems from its size. Baby Boomers are not only aging into
retirement, but they are living longer (hence they need places to
live) and a growing number are renting rather than owning. The
big question related to demand for living space for the aging Baby
Boomer generation is their choice of housing. Will they congregate
in senior housing complexes, move to urban apartments with desired
amenities or stay in their own homes? Will they flock to traditional
retirement climates such as Florida and Arizona or will they opt to
remain near families closer to where they spent the bulk of their
lives? The answers to those questions will determine the long-term
demand for residential construction.
After the 65+ cohort, the group with the most demand will be the
35-44 group. Our baseline scenario projects additional demand for
500,000 apartment units over five years and 1.2 million units over
10 years. Our optimistic scenario projects demand for an additional
600,000 units over five years and 1.4 million over 10 years. Again,
this is based on demographics as the Millennials age from the
under 35 category to the 35-44 group. A big question in projecting
demand is whether today’s Millennials act more like their parents
and buy homes as they enter child-rearing years or if they will
continue to gravitate to cities, whether they are parents or not.
Demand for apartments from the Millennial generation will be more
muted. Under our more optimistic scenario, there will be demand
for an additional 1 million units over the next decade from those
35-and-under. Our baseline scenario produces just over 400,000
units of demand over the next decade. Why the cooling of Millennial
demand? In large part, it is the result of the older Millennials aging
into the 35-44 age cohort, which historically has a higher level of
homeownership. Gen X, the cohort that follows the Millennials, is
simply not as large.
Table 7
Total U.S. Rental Households
(Source: Census Bureau, Yardi Systems)
Table 8
U.S. Rental Households < 35
(Source: Census Bureau, Yardi Systems)
Table 9
U.S. Rental Households 35–44
(Source: Census Bureau, Yardi Systems)
Table 10
U.S. Rental Households 45–54
(Source: Census Bureau, Yardi Systems)
Led by Boomers, Multifamily Demand to Remain Robust