Renter Nation – The Move Away From Homeownership

Renter Nation

Here is my latest video discussing the transition of the United States from a society and economy that was completely homeownership centric to one that has become much more of a Renter Nation. We at CWS believe this is a trend that has some very powerful economic, social, and demographic forces that should keep this in place for a number of years to come.

The following is a transcript of my video.

Hi, I’m Gary Carmell author of the Philosophical Investor Transforming Wisdom into Wealth.

As the economy was starting to recover in 2010, we believed that single family housing and the emphasis on homeownership, which is what dragged us into the near global depression, was not going to be what got us out. There was too much universal anger and disdain towards the financial community, the bankers, the people who made the bad loans, who prospered from them.

The government was going to step in, in a big way, and regulate the financial system more than it had, particularly mortgage lenders. As the economy recovered we believed that the households that would be formed in the wake of the job growth, that would manifest itself back then, would be much more renter oriented than single family homeownership. You combine that increasing demand for apartments with very minimal new supplies and we had this beautiful connection between decreasing supply and improving demand. We thought buying apartments would represent a great opportunity and offer excellent growth and returns on investment over the next four or five years.

Where do we go from here?

Well, our thesis turned out to be quite accurate. We have generated wonderful returns for our investors who have been very happy. So the question is where do we go from here? Is the renter nation concept still in vogue? I really do believe that it is. We have had an excellent 5-years but I look ahead and I see a demographic cohort of 18 to 30-year-olds who are most apt to rent growing in numbers.

I see social trends such as:

  • Delayed marriages keeping people renting longer.
  • The desire to be in vibrant urban areas.
  • Not, necessarily tied down by homeownership, at that point.
  • People coming out of colleges with Student Loans that make it difficult to qualify for mortgages.
  • 1 Million people who have moved back home that are going to be, at some point, prepared to enter the workforce OR once they have been in the workforce long enough to form their own households then we think that those will have a tendency to be renter households.

You put all of that together and we feel really optimistic and excited about the opportunities that will continue to present themselves to us in the apartment industry over the next several years.

Over to You: 

Where do you see the renter nation heading?

Renter Nation

Posted in Advice, Apartments, Economy, News

One comment on “Renter Nation – The Move Away From Homeownership
  1. Michael Murphy says:

    http://www.calculatedriskblog.com/2016/07/reis-apartment-vacancy-rate-unchanged.html?m=1

    Suggests that at least in certain markets supply is at or exceeding current demad at current prices. A lot of multi- family completions are coming due. Note the comment about lease up for newconstruction getting stretched which has affected some recent CWS purchases.

    However, thankfully apartment buildings are not mobile, so the economics are still favorable for select properties in the strongest markets. But for how long?

Leave a Reply

*

Categories

Free Insights