After years of a soft overall U.S. housing market, the Mortgage Bankers Association now foresees a decade of strong demand for both single- and multi-family housing.
"Household formation has been depressed in recent years by a long, jobless recovery and by a lull in the growth of the working age population," said Lynn Fisher, MBA's vice president of research and economics. "(However,) improving employment markets will build on major demographic trends - including maturing of Baby Boomers, Hispanics and Millennials - to create strong growth in both owner and rental housing markets over the next decade."
According to MBA estimates, the number of households headed by people 45-60 will decrease over the next decade—because of the relatively small size of the Gen-X cohort. The number of rental households headed by Millennials will increase by 2.7 million units. But the largest increase—3 million units—will come from Baby Boomers.
The MBA doesn't make it clear what percentage of this increase will come from existing tenants simply aging into the 60+ category, compared to the number of Boomers who move into rental accommodation as part of an expected downsizing trend. Either way, the relative importance of older tenants is bound to increase.
Since an increased demand for rental housing is inevitable, it seems likely we'll see an increase in multi-family housing starts. It will be interesting to see how big multifamily owners like Hunt Companies and Boston Capital, and big developers like Alliance Residential, Mill Creek, and Lennar adapt their offerings—and marketing—to attract older renters.