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What Millennials Mean for Wisconsin's Housing Market 

Millennials Renting

The rental market 

In 2015, the Millennial generation became the largest numerical segment of America's workforce. In 2016, they will become the largest percentage of the workforce. Although Millennials have been slow to enter the housing market, the National Association of REALTORS® indicates that 91 percent of Millennials report that they want to get married and own a home. As they do so — and many have already bought homes — they will become the largest generation of homebuyers in American history. In the first edition of the Insights report, professor Steve Malpezzi of the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business provides information and insights about your future customers.

Rental market thriving for Millennials  

The rental market will continue to thrive for Millennials and others. While the majority — 65 percent — of U.S. households are still homeowners, rental housing, which is always important, has been especially critical since the 2006 housing bust. In 2006, there were about 76 million owner-occupied households; since that time, the number has declined slightly to about 75 million. But over the same time frame, the number of rental households increased from about 35 million to 41 million today. In Wisconsin as well as the U.S., multifamily starts are back above trend, yet single-family starts are still well below trend.

Most multifamily units are rental properties, but about 13 percent are condos and co-ops. Few single-family units are purpose-built for rental, but about 15 percent of single family units are rented. Looked at another way, about 60 percent of rental housing is multifamily, and about 35 percent of rental housing is single family; another 5 percent of renters live in mobile homes.

Rents in Wisconsin are less burdensome compared to many other states. Richard Green and Pamela Lee use Census and American Community Survey data to analyze inflation-adjusted rents and incomes in 2000 and 2013; some of their data is presented below. Each dot represents a metro area; Wisconsin metro areas are labeled with a short version of their names.

Compared to other markets, Wisconsin’s metro areas have moderate rent levels and have experienced modest increases in recent years. As the chart below shows, real rents have been rising during the past decade in many markets, especially in coastal markets. The national average rent in 2013 was $876; all the Wisconsin metro areas were below this average. The average real growth rate from 2000 to 2010 was 0.8 percent; all Wisconsin metro areas were below this average. On balance, rental housing, and for that matter owner-occupied housing, remains affordable by national standards in Wisconsin.
 
Real Monthly Rents in 2000

 

 

 
 
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