Prime renter demographic growth
Increasingly mobile and growing Prime Renter population (20 to 34 years old) favors apartments. Lifestyle renters across virtually all age and wealth groups prefer the flexibility, convenience and capital preservation of renting.
Student loan debt in billions (under age 30)
Student loan debt is at record levels creating additional burden to would-be homebuyers thereby creating a longer term renter.
Home buying events
Life changing events (marriage and first births) for Prime Renters, which trigger home buying, are happening later in life.
Homeownership rate (under age 35)
Homeownership rate for Prime Renter age cohort is at a multi-generational low. Across all age cohorts, every 100 bps decrease in total U.S. homeownership equates to over 1 million new renters, according to the Census Bureau statistics. Continued long-term decline in home ownership rate driven by the strict mortgage underwriting criteria, impaired household balance sheets, and loss of confidence in single-family appreciation potential.
New Supply and Occupancy Rate
Construction of apartments reached a low in 2Q11 and only recently reached longer term average. Increasing levels of supply still trailing demand as occupancy rates have increased at the same time. Apartments are highly occupied –average 95% as of 4Q 2015.
Job Growth to MF Permits Ratio
Job growth relative to new supply is near a 20-year high suggesting continued strong rental demand. Conversely, new supply is warranted by underlying economic growth. Supply risk is a submarket-by-submarket analysis.