Millennials will play a key role in bolstering the rental housing market over the next several years, as the generation of 73 million people ranging from their late 20s to early 40s is undergoing a variety of significant life milestones.
The median age of marriage for millennials is about 29 years old, and many of this generation are forming families, which has a significant impact on the housing market, said John Chang, national director of research and advisory services at Marcus & Millichap.
“There are a couple of factors in play,” said Chang. “First, the enormous wave of millennials in their prime household formation years is a core underlying housing demand driver, and even though the leading edge of this cohort is aging into their 40s, they're staying in rental housing longer.”
Recommended For You
Apartment lease renewal rates have been climbing over the past year and are currently in the 55% range. Fewer renters are transitioning into home ownership in part because the quality of life in apartment rentals has improved over the years with more services and amenities, higher caliber finish levels, and better floor plans, said Chang.
“Apartment developers have really improved their product lines to make them more appealing to tenants, which has, to a degree, mitigated the desire for home ownership of many young adults,” he said. “That's not to say that people in their 20s, 30s, and 40s don't want to own a home, but the gap between the quality of housing they can rent compared to the quality of housing they can afford to buy has grown wider than it was in the past.”
In addition, homeownership has become more challenging to attain as the median price of a single-family home has climbed by 6.1% over the past year. Overall, home prices are up almost 50% compared to the beginning of 2020, and the payment on a median-priced home is about $3,100 per month. That compares with the average apartment rent in the United States of about $1,830 per month.
The median age of first-time homebuyers was 30 in 2010, 33 in 2020, 36 in 2022, and 38 in 2024. Chang said that the trend is unlikely to change soon.
“Home builders simply aren't adding enough single-family houses to put downward pressure on prices, and at this point, mortgage rates aren't showing any signs of an impending decline,” said Chang. “Looking forward five years, although things could change, it looks like the US will continue to face a housing shortage, and there will continue to be a significant affordability gap between home ownership and renting.”
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
