Demand for BTR housing is projected to rise in the coming years as younger adults delay starting families. Millennials are forming households later and that pause is expected to result in home ownership being pushed back, as well. The rental housing market will likely benefit since a generation of 73 million people in their late 20s to early 40s are set to cross a number of big life milestones during this timeframe.
The median age of marriage for millennials is roughly 29 years old, and many of this generation are forming families, which is expected to have a significant impact on the housing market, according to research by Marcus & Millichap. A significant number of millennials are now in their prime household formation years and this demographic is a core component underpinning housing demand. Yet even though this group is now entering their 40s, they are remaining renters longer. The median age of first-time homebuyers mirrors this delay in household formation. Since 2010 the median age of first-time homebuyers has increased from 30 to 38 in 2024.
Higher quality housing options within the Single-Family Rental and Build-to-Rent (BTR) sectors are encouraging renters to remain, which is reflected in the fact that fewer renters are transitioning into home ownership. BTR developers have understood this need and worked to create housing options that appeal to a demographic that typically would be seeking to move out of an apartment into a more traditional family-style home. BTR communities deliver the lifestyle and flexibility renters seek today. People favor these communities because they tend to be higher end properties that live like a single-family residence.
The attraction to stay longer is further being encouraged because purpose built BTR’s now feature more services and amenities, higher caliber finish options and more appealing floor plans. The BTR projects that have found favor across multiple demographic segments include those with large private yards, doors for pets, as well as a host of amenities or gathering areas found in luxury apartments like pools, spas or game lawns. Residents in BTR communities gain the single-family type of home environment, and also like having a maintenance staff to take care of the property so they can spend time doing things they enjoy with family and friends.
The delay in home ownership is also being driven by the fact that the gap has widened between buying and renting a quality home. Renters simply are not able to afford buying a home. The median price of a single-family home has increased 6.1% in the last year and overall home prices have risen nearly 50% compared to 2020. It is not difficult to understand why renters are delaying buying a home when comparing mortgage payments, which are exceeding $3,000 per month for a median-priced home compared to roughly $1,830 per month for the average apartment.
The lack of single-family housing supply continues to place downward pressure on prices and when combined with higher mortgage rates, many would-be buyers are simply not able to buy a home that aligns with their standard of quality. The affordability gap between homeownership and renting is expected to remain for five years. That will continue to drive demand for high-quality BTR communities.
