People always need a place to live. Shelter is one of the basic requirements of man. This fact alone, gives multifamily residential properties an advantage over other types of real estate investments. You can rest assured knowing that there will always be a demand for residential housing whether the market is going up or down.
Because of this, there has always been a traditionally demand for rental housing. Let's look at a number of factors that will cause demand to soar even higher in the next decade to come.
ECHO BOOMERS (children of Baby Boomers)
Echo boomers are a group of individuals comprising of those born between 1982 and 1995. It is estimated that there are around 80 million echo boomers, currently living in the United States. This makes up the largest demographic group in the United States since the "Baby Boomers" of the 1960's. As a group they comprise over one-third of the total U.S. population. The media has labeled them echo boomers because they are the offspring, the "echo" of the last great population surge in America, the baby boomers.
The reason echo boomers are so significant, is that it is estimated that over the next decade approximately 4 million of them will become adults each year. According to a study generated by Harvard University Joint Center for Housing Studies, 80 percent of all households who residents are under the age of twenty-five are renters, and 65 percent of those with residents ages twenty-five to twenty-nine are renters. That's a lot of renters!
Until their children (Eco boomers), came along, Baby Boomers (1960's) were by far the largest demographics in American history, generally estimated to be around 78 million. Baby Boomers are are generally considered to be those having been born between the years 1940's and 1960's. The first individuals born to this era are just now beginning to reach retirement age.
According to the same Harvard study (we quoted for the Echo Boomers), a large portion of Baby Boomer aged sixty-five and older are renters. It is estimated, that there are currently 4.1 million households aged sixty-five or older, where an individual rents in the United States. This number will grow exponentially in the coming years as more and more of these (78 million) Baby Boomers begin to retire.
The National Association of Relators, wrote an interesting article. - where is said, 19 percent of all Baby Boomers are renters and 37 percent of them, admit that they will have difficulty making ends meet. Many of these households rely on dual incomes. It is inevitable that the financial pressures of retirement (unexpected medical costs, or if a mate dies) will force some of these households to rent after retirement.
Retiring Baby Boomers will thus be an important factor in the rental market in the years to come. For this reason, I believe one of the best investments to make at this time, are multi-family residentual communities.
If we put Baby Boomers with Eco Boomers, this represents 158 million households - comprising of two-thirds of the entire U.S. population - who will potentially be renting in the years to come. This will put a huge upward pressure on occupancy and rental rates. Which means, we could be seeing the beginning of the golden age as it relates to investment housing. When you are looking at numbers like this, it may seem like pay day everyday. And as if that weren't enough, there is another demographic group that we have not even considered yet as to potential renters: Immigrants.