In the United States, many people are deciding to rent instead of owning a home. As a result, young people face one of the most competitive rental markets in the past 10 years.
People under the age of 24, known as Generation Z, are competing with older generations. Many millennials, people aged 24 to 40, and baby boomers, those over 57, are looking for apartments too.
People are choosing to rent for different reasons. One expert talked with VOA and said a lack of available houses is one big reason.
Doug Ressler is with Yardi-Matrix, a research company that deals with business properties. He said that aging millennials who are starting families should be moving from rentals to home ownership. But in many cases, they are not because of the lack of available houses. And so, he said, these older millennials continue to rent.
It is not just millennials or Generation Z, Ressler added. The number of baby boomers moving into rental properties has been growing in the last five years.
There are other reasons older people are choosing to rent instead of owning. “They've lived in a home for so long and they want to be able to reduce their expenses on a fixed income,” Ressler told VOA.
Another housing expert describes the rental market as “hot,” meaning very competitive.
“It's a hot market. We have never seen this market so hot in the last decade,” said Gay Cororaton. She is director of housing and commercial research at the National Association of Realtors.
She said: “The average rent growth, year-over-year, is about 3-to-5%. We're seeing 11% rent growth now.”
A housing shortage in the U.S. and in other countries
In many large cities around the world, people say they are facing a housing shortage that is affecting both rental properties and available homes. In September, Bloomberg reported about rising rent payments in major cities. People in Australia, Canada, Germany, Ireland, Argentina and South Korea said it was harder to afford apartments in city centers. High rental costs make it more difficult to save for a house.
Another influence on the current housing situation has been the COVID-19 pandemic. It has caused problems for the building industry. Supplies of building materials have decreased while costs have gone up.
In the U.S., this slowed down home building. It also meant that the supply of available homes had dropped well below normal levels by January of this year. The lack of housing supply means millennials are having a harder time finding and buying single-family homes. Traditionally, millennials are at the right age for home ownership.
Cororaton said the supply of available houses shrank during the pandemic as more investors put their money into housing. She added that some homeowners also looked for second homes during the pandemic.
“With the pandemic, there was also a big demand for second homes, for vacation homes. Typically, vacation homes accounted for just about 5% [of the market],” she said. “Early this summer they rose to about 8%...strong demand and strong imbalance of demand and supply caused home prices to rise,” she noted.
Cororaton expects conditions to improve in the coming year but says the housing shortage is likely to continue for the next few years.
I’m Jonathan Evans.
Dora Mekouar reported this for VOA. Anna Matteo adapted it for Learning English. Mario Ritter, Jr. was the editor.
Words in This Story
rent –v. paying money to be able to use someone else’s property especially to live in an apartment or house that belongs to someone else
apartment – n. a (usually) rented room or set of rooms that is part of a building and is used as a place to live
expense –n. the amount of money needed to pay for a good or service; a cost
fixed income –n. a regular payment that does not change
decade –n. 10 years
afford –v. to be able to pay for something
typically –adv. usually, generally or normally
account for –v. to give a reason or explanation for something that takes place