Why Are Some Millennials Planning to Rent Forever?

For a rising number of millennials, a house is not a home. Instead, they plan to rent—forever. But it isn’t because they desire the flexibility to jet-set from one city to another. Instead, they feel they cannot afford a home, now or ever. Barriers such as student debt, bad credit, and a lack of downpayment are forcing millennials to look at housing much differently than their parents did.

Millennials have a uniquely frustrating relationship with the housing market. When baby boomers and gen X hit their thirtieth birthdays, rapid construction and suburbanization were proliferating relatively affordable housing options. For most of the 20th century, purchasing a home was central to the American Dream. But millennials came of age in a very different climate. As young adults, the economy was characterized by the collapse of the housing market, quick growth in the cost of housing, and worsening income inequality. By the time millennials were old enough to want to buy a home, many were skeptical they could afford to do so. This economic uncertainty—characterized by relatively low homeownership rates, delayed marriages, and smaller families—has become a central tenet of the millennial identity.

The vast majority of millennials want to own a home, but millennial homeownership rates have significantly lagged previous generations. To better understand this discrepancy, Apartment List has been surveying millennials for the past five years (see our previous reports on the subject here and here).1 In our survey, we ask renters to describe their homeownership goals and the tangible factors influencing their ability to purchase their first home. This year we received responses from over 10,000 millennial renters across America. Several notable themes emerged. The share of millennials who plan to rent forever is on the rise. Even among those who expect to purchase a home in the future, nearly half have saved nothing for a down payment. Affordability concerns appear to overpower lifestyle preferences. And the enduring effects of student loan debt and a decline in family support are keeping homeownership out of reach for many millennial renters.

Read More