The premise has been that rental demand is driven by millennials who rent for job location flexibility, lack cash for a down payment, prefer urban locations but rent for square footage single-family detached. And Boomers insist on the equity creation of home ownership is dispelled by a Freddie Mac survey that reveals over half of the 67 million boomer homeowners over age 55 prefer to rent over home ownership. Six million boomers predict they will sell their house and rent by 2020. Of that cohort, 71% of the boomers who already rent indicated they expect to move to another rental at the same or lesser rent amount.
Here are the implications for investors considering the single and multi-family rental market of assets, focus more on attached product than you have. Sure the strongest appreciation to date has been in detached, single-family homes priced under $250,000 but the next wave of renters is older, still active, who care about location more than square feet that drove new home construction to the suburbs. We expect to see the next wave in appreciation to be in attached product that requires some rehab to update kitchens and baths, to add modern appliances for boomer renters. This is a major shift in target product supported by the Freddie Mac study. It also is a buying opportunity in a tight inventory market. Get professional support to identify the product that works best for your investment thesis.