I have written previously about a couple of important demographic and social trends that support long-term demand for apartment renting. These include delayed marriages and the corresponding births that are taking place at older ages for women. This week two reports came out showing how these trends continue. For the first time the Census Bureau is now tracking same sex marriages in its national marriage statistics. The report released this week shows the lowest marriage rate since this statistic has been tracked going back to the 1920s. The following graph depicts this significant drop:
Marriage Rates Drop
That is quite a significant drop in the marriage rate. From the 1920s through the 1960s it increased from 65% to 72.2% only to see it drop steadily through 2000 and then precipitously since then to 50.3% in 2013. People are getting married later and the marriage rate is dropping the most for the least educated adults. Fortunately, the teen pregnancy rate is . It’s interesting how most people think of the 1950s as this idyllic time in America and yet teen pregnancies (in terms of birth rates) were at record highs. The absolute number of births peaked in the early 1970s and is now approximately half of the peak as the following graph shows:
Lower Birth Rates + Delayed Marriages
With a lower teen birth rate and delayed marriages, this naturally leads to women having children later in life as this week’s article on Bloomberg.com discusses. The following chart from The Center for Disease Control shows how birth rates have been rising for older women and dropping for younger ones.
There are a lot of spillover effects from having kids later in life according to research cited in the article.
For each year motherhood is delayed, career earnings increase by 9 percent, work experience by 6 percent and average wage rates by 3 percent, according to a 2011 paper by Amalia Miller, an associate professor of economics at the University of Virginia in Charlottesville. Women who have college degrees and jobs in professional and managerial fields see the greatest gains, she found. “Later first births allow women more time to invest in schooling, work experience and on-the-job training that will, on average, increase their lifetime wages,” Miller wrote in an e-mail.”
The children of those women also benefit, Sawhill found. Preventing unexpected births lifts a child’s lifetime income by $52,000, according to Brookings’ study released yesterday. College and high school graduation rates both increase, while the chances of the child becoming a teen parent or being convicted of a crime decline.
“Delaying childbearing until you’re ready to be a parent is not just about improving your own life, it’s about giving your children greater opportunities in life,” Sawhill said.
And with the educational gap between women and men growing, as evidenced by 32 percent of women having their bachelor’s degree by the age of 27 compared with 24 percent of men, we are of the belief at CWS that marriages will continue to be delayed. The reason is that we don’t expect the vast majority of college educated women to marry men without degrees. This could be construed as somewhat of a controversial opinion, but we only care about what happens and not what people think should happen.
Biggest Catalyst for Home Buying – Marriage and Having Kids
The biggest catalyst for home buying is having kids and with marriages being delayed and child birth taking place later as well, we believe this is very favorable for continued strong rental demand. Finally, despite these trends, the overall number of births is still at a healthy number, which is also quite positive for having a relatively large pipeline of future renters over the next thirty years or so as the following chart shows.
And while it’s true we have witnessed one of the strongest apartment investing cycles over the last five years that most of us can remember, we continue to believe that there are compelling reasons to remain bullish about rental demand for a number of years to come. The combination of delayed marriages, later births, more stringent loan requirements, and a growing population all combine to provide a powerful set of factors supporting apartment owners for a number of years to come.