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Professor of Real Estate Finance Anthony B. Sanders discusses his son’s struggle with finding an affordable apartment. 

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Why millennial renters are far more common than homebuyers

Situated in the heart of D.C. with the Wharf and the National Mall just a few steps away, George Mason graduate Kevin Lin begins every morning at 8 a.m. sharp in the comfort of his home.

 The first cup of many coffees he will have throughout the day sits on top of his kitchen counter. Its surface is riddled with papers for all three of his jobs, one of which is a full-time office position. Despite his crazy schedule, Lin is living his dream city life.

 There’s only one catch for him: he’s sharing his apartment with two other roommates.

 “I rent a 2B2B with my roommates,” said Lin. “It can get pretty hectic with only two bedrooms, but I use a divided curtain to change the living room to my private space in order to share my rent. I’ve saved nearly $500 this way.”

 The popularity of 2B2B’s---or two-bedroom apartments—is rapidly skyrocketing among millennials today. With the inflation of housing at its highest in decades, renting is becoming the most affordable option.

 A 2019 home affordability report conducted by real estate firm Unison calculated that it took nine years to save for a down payment in 1975. Today, it takes 14. The national homeownership rate for people under 35 has declined by 7.2% from a peak of 43.6% in mid-2004.

 According to Professor of Real Estate Finance Anthony B. Sanders, student debt and government policy play a major role in the steady increase of housing prices.

 “The federal reserve has helped create a housing bubble or a price bubble,” said Sanders. “Housing is extremely expensive, and part of that is due to the federal reserve’s low interest policies. Then there’s the issue of crippling student debt.”

 To cope with heaps of student loans after graduation, most millennials like Lin opt for renting with roommates and working multiple part-time jobs. For Lin, this means balancing his dream career with “side hustles” to bring in the extra cash.

 The 2018 U.S. Census reports that half of millennials have part-time jobs to make ends meet. These often entail short-term contracts and freelancing work, much of what Lin is currently balancing within his busy schedule.  

“After my office job ends at five p.m., I typically rush home to a nearby café to do my remote work at six,” said Lin. “I answer emails for a couple of hours, work on projects, then do some freelancing photography on the side. Lots of people think I’m crazy for working three jobs, but I’m honestly just happy for all the opportunities and of course, the extra cash.”

 Aside from renting and endless working hours to make ends meet, other millennials opt for living at home. U.S. Census data from a 2016 report reveals that 1 in 4 millennials still live with their parents.  

 Like many other college students, third year student Marwah Tokki chose to live off-campus instead of paying extra for housing. Living closer to college also allows her to create a flexible schedule with school, work and social activities.

 “I just love the vibe of Northern Virginia and our communities,” said Tokki. “Everything that we need from shopping malls to hospitals to grocery stores are so easy to get to. Living off-campus lets me meet up with friends and at the end of the day, go home to the comfort of my own bed without worrying about endless bills to pay.”

 Student debt currently sits at number one as the top reason why most millennials can’t afford to buy homes. But even after graduation, why can’t adults well into their late 20’s or early 30’s catch up with their loans?

 The increasing gap between income and housing prices may be to blame. Median home prices have risen in recent years up to four times the rate of household incomes since 1960. Renters face the same dilemma in conglomerated cities.

 “Wage rates in the DC area are pretty good,” said Sanders. “But unfortunately, house prices have outgrown your ability to pay. Texas has inexpensive housing but doesn’t have the DC area job networking. In the end, it all depends on location, which is why renters find themselves squeezing into city apartments with many roommates.”

 The future of housing for millennials and even Gen Z’s certainly looks bleak; many economists and real estate experts predict the continued inflation of housing prices for the next several years. However, society also continues to evolve and adapt to these financial hurdles.

 Whether the solution calls for renting with roommates, working multiple jobs, or opting for off campus living, millennials are taking the problem into their own hands for the benefit of their futures.

 “Once I’ve made enough money, my dream is to buy a big house close to the Potomac River,” said Lin. “Whenever I feel tired or less energetic, I’ll think about how much it’ll be worth it in the end.”