Apartment rental demand soars as more millennials believe it’s cheaper than owning a home

In the D.C. suburb of Chevy Chase, Maryland, a massive apartment rental and condominium complex is going up, and apparently it can’t happen fast enough. Demand for rental apartments in and near cities across America is soaring, just when most thought it wouldn’t be. The expectation was that rental demand would fall as millennials aged into their homebuying years.

Apartment demand in the second quarter of 2019 spiked 11% from a year ago. That, in turn, pushed rents up an average 3% nationally to $1,390 per month, according to RealPage, a real estate software and analytics company.

“Demand is proving especially strong in this year’s primary leasing season,” according to RealPage’s chief economist, Greg Willett. “Solid economic growth is encouraging new household formation, and rentals are capturing a sizable share of the resulting housing demand. At the same time, loss of existing renters to home purchase remains limited relative to historical levels.”

Despite the increase, a record 82% of renters say renting is more affordable than owning, according to a new survey from Freddie Mac, up from 67% just a year ago.

“Affordability remains the essential factor when it comes to determining whether to rent or purchase a home, and the cost of housing is having a significant impact on households of every age, size and location,” said David Brickman, president and CEO of Freddie Mac. “For millennials and many Gen Xers, buying a home is no longer just a decision based on housing and housing costs — increasing pressure from student loans and the rising cost of child care are having a significant impact.”

Rental demand is currently highest in the nation’s largest cities, with Dallas/Fort Worth, Chicago, Houston, New York City and Washington, D.C., leading.