The US Census Bureau recently released data showing that the rate of homeownership among people under the age of 35 has been in a steady decline in the past half-dozen years. The ownership rate stood at 41.3% in the first quarter of 2008 and dipped to 35.9% in the second quarter of this year.
That translates to a significant number of under-35ers who’ve opted to rent rather than buy. The trend-line has been noted for some time, and has been the subject of much commentary. Typical explanations for the decline have included an increase in student debt, a scarcity of well-paying jobs, changing preferences for flexibility and liquidity, and more stringent mortgage lending standards.
There might be an explanation that hasn’t received any attention, to my knowledge. In downtown Chicago, at comparable monthly costs, the quality of rental housing in newer developments far outstrips the quality of available resale condominiums.
It wasn’t that long ago that new apartments were being marketed as having “condo-quality finishes” At many of the newer projects the apartment finishes are superior to what’s typically available in many of the condos on the market.
The amenities packages in large condo buildings generally compare very poorly to what’s available at the newer luxury rentals. It’s also worth noting, I think, that real estate brokers rarely place any emphasis on the amenities packages available in condo buildings. Rentals are out-marketing condos.
Many of the larger downtown rental complexes offer an extensive program of social, educational and fitness events. Building managers report that this has had a strong appeal to new residents, and has been a factor in resident retention.
The newer rental complexes often have dog runs, a feature lacking in most condos, and have more flexible and welcoming pet policies.
In lakefront Chicago, the simplest explanation for a declining rate of ownership among the under-35 set might be that renting offers more people more bang for their buck.