Homeownership in the U.S. is still being held back by two key demographic and lifestyle trends.
The millennial generation has delayed marrying and delayed starting families, both traditional trigger points for moving out of multifamily rental housing and into homebuying.
These trends will continue to influence the U.S. multifamily market but to a smaller degree going forward.
Marriage Age Continues to Rise
The average age of U.S. adults at their first marriages has risen to historical highs. From 1960 to 2018, the average rose seven years for both men and women, according to the U.S. Census Bureau. Over the past 10 years alone, the average climbed by two years. In 2018, the average age was 29.8 years for men and 27.8 for women.
Marriage is closely associated with homebuying, and delays in the former are contributing to delays in the latter. Later marriages are keeping younger adults in rental housing longer and has contributed to the high U.S. multifamily demand in recent years.
Married couples are far more likely to purchase a home than any other household types, making up 66% of homebuyers across all age categories, according to the 2018 Home Buyers and Sellers Generational Trends Report published by the National Association of Realtors (NAR).
Marriage Story More Complicated
Delayed marriage clearly helps explain delayed homebuying. Yet, the importance of marriage for homeownership is changing.
Marriage rates, in general, are declining; 50 years ago, 72% of all adults 18 and over were married compared to 50% today. Also, the share of adults that have been married at least once (but may currently be unmarried due to divorce or widowhood) has fallen from 85% in 1960 to 67% today. Non-married couples living together, single-person households and single-parent households are much more common today and are better represented among homebuyers than in previous generations. For example, NAR reports that single women now account for 18% of homebuyers.
Women Wait Longer to Have Kids
Women are delaying starting families, another significant factor in the sustained high levels of demand for multifamily housing.
A consistent trend in the U.S. over the past five decades has been the delay of childbirth. The mean age of first-time mothers has risen steadily since 1970 when it was 21.4 years. In 2017 (the latest data available), the average age was 26.8 years according to the U.S. National Center for Health Statistics.
The most notable increase in mother’s age at first birth over the past 40 years occurred in the most recent decade–since the last recession. The average age of women giving birth for the first time was 25.2 years in 2009. The 2017 average is 1.6 years higher.
There is a long list of economic, social and medical factors for starting families later. They include economic uncertainty, rising educational goals, declining teenage pregnancy and medical advancements that offer women more flexibility for choosing when to have children. Whatever the reason, it has slowed down the exodus of women (and families) from multifamily rental housing into homeownership.
Birth Rate Rising for Women in Early 30s
While, overall, women are delaying having children, birth rates for women in their early 30s is rising. Women are beginning to catch up from not having kids in their 20s.
Particularly since 2010, the birth rate for women aged 30 to 34 has edged up. In 2016, it surpassed the rate for women aged 25 to 29 for the first time in history. In 2017, of women aged 30 to 34, the first rate was 100.3 (that is, the number of live births for every 1,000 women). For women aged 25 to 29, the rate was 98.0. The fertility rate for women in their later 30s was also high at 52.3.
The increased birth rate of women in their 30s is providing stimulus to renter families to move into homeownership. It is not enough to offset the broader trend of delayed first births, but increased childbearing of 30-year olds should be monitored given that 61% of the 72 million millennials in the U.S. will have reached their 30rd birthday in 2019.
Delayed marriage and delayed first births are two keys societal trends keeping younger adults in multifamily rental housing longer than previous generations. They will continue to influence housing choices in the U.S.
With homebuyers becoming more diverse (e.g., single households and unmarried couples) and with millennials aging and finally getting around to marrying and starting families, the trends will not be as powerful over the next 10 years as the last 10 years.
By Jeanette Rice, Americas Head of Multifamily Research, CBRE.