Think U.S.: Investing in the MiMis (Millennials & Middle Income Households)
We believe the demand for apartments in the U.S. is set to continue in the next decade, due to demographic trends, most notably from the millennial cohort, and affordability concerns across middle income households.
Our report looks at eight 'flight to suburb' metros which may lose higher income older millennials as they marry and have children. However, this will also create an opportunity in those metros for potential dislocation in the luxury and Class A apartment market. We believe younger millennials will continue to rent but migrate to cities with the strongest job prospects at a lower cost of living.
Millennials tend to earn the U.S. median household income or less, making them the 'rentership generation'. Aside from earning middle-income salaries, several key factors contribute to millennials' propensity to rent, such as declining home affordability, record student loan debt burdens, stricter lending requirements and delayed decisions to marry and start families.
Middle income households represent a stable and sustainable long-term source of demand for apartments. Middle and lower income households tend to rent out of necessity, rather than choice.