Renters Gain as Kids in U.S. Move Out
of Parents’ Houses
by John Gittelsohn, Prashant
Gopal
1:29
PM CST
January 29, 2015
(Bloomberg) -- Parents who’ve been waiting for their grown children to move
out may finally be in luck.
The number of renter-occupied residences grew by 2 million last year,
according to a report Thursday from the U.S. Census Bureau in Washington.
Vacancy rates for rentals fell to 7 percent in the fourth quarter, the lowest
since 1993, the data show.
A resurgent job market is enabling more members of the millennial generation
to leave the nest. Along with its benefit to parents, the trend is good for
apartment and single-family home landlords, who may be able to raise rents as
demand increases faster than the supply of properties for lease.
There’s a “pent-up demand for housing that’s built up as young people waited
longer to enter the housing market,” Jed Kolko, chief economist for San
Francisco-based real estate researcher Trulia Inc., said in an interview. “All
of the reported household formation is new renter households.”
The number of owner-occupied households fell by 354,000 from a year earlier
as the U.S. homeownership rate dropped to its lowest level since 1994,
according to Census data. The ownership rate for people under age 35 fell to
35.3 percent, down 1.5 percentage points from a year earlier and the lowest level
in Census data going back to 1982.
Largest Increase
The increase in total households -- 1.66 million -- is the largest since
2005, according to Kolko, who said that quarterly data on housing vacancies and
ownership rates is less reliable than Census reports that take longer to
release.
The vacancy rate for owner-occupied properties declined 0.2 percentage
points to 1.9 percent.
Demand for apartments will grow as “1 million households still could begin
to unbundle,” AvalonBay Communities Inc. Chief Executive Officer Timothy
Naughton said on a conference call Thursday. His Arlington, Virginia-based
company is the biggest publicly traded apartment landlord after Equity
Residential.
“We expect fundamentals in the apartment space to remain very strong,” he
said.
U.S. renters paid $441 billion for apartments and houses in 2014, a $20.6
billion increase, as fewer Americans owned their homes and landlords with tight
inventories charged more, according to data provider Zillow Inc.
Moving Out
Margaret Mooney, 27, this month moved out of her parents’ house to a
three-bedroom Washington apartment she shares with a roommate. They’re looking
for another tenant. Her share of the rent is $1,375, not including $85 for a
parking space and about $100 for utilities.
“I finished my graduate degree and got a promotion,” said Mooney, a director
at Collingwood Group LLC, a housing-finance consulting firm. In October, she
received a master of business administration degree from Mount St. Mary’s
University in Emmitsburg, Maryland. “I got a pretty significant wage increase,
so I was able to move out.”
Doing so let Mooney shave an hour from her round-trip commute each day.
Having moved out, she’s learning to cook, and her parents are adjusting to life
as empty-nesters.
“I was surprised how sad they were,” she said. “They were giving me a hard
time about living with them for the last two years.”
To contact the reporters on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net;
Prashant Gopal in Boston at pgopal2@bloomberg.net
To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
Daniel Taub
