By Judy Bellack, Industry Principal, The Pet-Inclusive Housing Initiative
U.S. homebuyers are facing monthly mortgage costs that are 52% higher than the average monthly apartment rent, according to a recent analysis by CBRE Research, a real estate and investment insight firm. Placing that number into sharper focus: monthly mortgage payments, including taxes, have risen by 70% since 2019.
While that’s a staggeringly discouraging figure for the prospect of living the traditional ‘American Dream,’ it should be a rallying cry to apartment marketers everywhere. Not only is this an opportunity to create campaigns and strategies targeting the generations most impacted by this dynamic – Millennials and Gen Z, ages 18-44 – it also signals a broader opportunity to redefine the American Dream around renting as a more affordable, flexible lifestyle choice with fewer financial surprises.
What do current data tell us about these generational groups? Here are just a few significant points:
- 55% of young adults aged 18-34 believe purchasing a home is “much harder” than during their parents’ prime homebuying years. (Pew Research Center)
- One in three GenZ adults say homebuying is out of reach financially. (Freddie Mac)
- GenZ adults acknowledge the benefits of renting, citing flexibility (76%), being close to the “action” (65%), and less stress than owning (63%) as positives. (Freddie Mac)
- Younger generations are grappling with student loan debt (43% of Millennials and 28% of GenZ), making it harder to save for a down payment. (Bankrate)
- Home lenders have become extremely selective when extending mortgages to first-time homebuyers. (Chandan Economics)
What else do we know about these groups? Well, among other things, we know quite a few of them have pets. Millennials/GenX and GenZ comprise 79.5% of pet owners, according to the Pet-Inclusive Housing Report. And they love their pets!
- GenZ and Millennials consider their pets when making a home purchase/rental decision up to 10 ppts more often than older generations. (APPA)
- The percentage of multi-pet households has risen steadily over the past several years, but this increase is almost entirely explained by Gen Z and Millennial households (as much as 18 ppts higher than older generations), which are also driving rental demand.
- The human-animal bond continues to grow significantly year after year across generations. (HABRI)
- Gen Z and Millennials take their pets to the vet more often than previous generations. (APPA)
It’s a great combination for the increasingly pet-friendly rental housing industry . . . prospective residents who will be renting longer, and who will be looking for rental housing that accommodates their pets. Since we know that pet-owning renters stay longer to begin with, this bodes well for the industry as rent growth slows, and the NOI boost from residents representing lower turn costs and vacancy loss should garner every savvy operator’s interest.
There’s yet another twist to this dynamic for operators who really want to turbo boost their ability to capture these younger pet-owning renters who are postponing/foregoing homeownership – and that is to allow even more pets by becoming truly pet inclusive. Typical ‘pet-friendly’ weight and breed restrictions eliminate a large component of this renter pool, and frankly, these restrictions are outdated and lacking supportive data. That’s not inclusive at all. Most animal behavior authorities agree that breed is not a valid measure of whether or not a dog may display aggression; instead recommending that individual behavior is both a more accurate and safer method for determining restriction. Defining acceptable dog size as 30 or 40 pounds in a country where the majority of dogs are over 35 pounds also limits the renter pool and again, is outdated when you consider that only 9% of pet-owning units report damages, and those damages average only $210.
In a nutshell, Gen Z and Millennials are renting longer, have more households with pets, have more pets per household, and will only continue to grow as a component of multifamily renter households. Are you poised to welcome this growing market group? As you consider your journey from pet-friendly to pet-inclusive, please visit the Pet-Inclusive Housing Initiative, or feel free to reach out to email@example.com. for more data and resources.