Millennials’ Love Affair with Renting

Will it ever come to an end?

Renting an apartment. It’s a seemingly inevitable task that happens once you graduate and move to the big city. Sure, there are some people who are buying, but millennials have consistently shown their preference for renting.

There are many reasons contributing to the growing renting trend: student debt, huge down payments and uncertainty in the job market are all factors at play. According to a recent Apartment List study, college-educated millennials with student debt have to save for 10 years to be able to afford a 20 percent down payment on a home, compared to five years for those without debt.

ESTATENVY chatted with Ginger Bonneau, a real estate consultant at @properties. She has worked with hundreds of millennials over the past year, and has seen the millennial mindset towards renting at work.

“Millennials are unsure of what neighborhood they want to live in. They don’t have to commit if they rent, and they can try out different neighborhoods to see which they like best. They also don’t have to help with the upkeep of the property— no mowing grass, no shoveling snow, no fixing the faucet that stopped working. I do 400 to 500 rentals a year, and I’ve seen a lot of millennials. There’s an ease that comes with just renting,” Bonneau stated.

Figuring out where they want to rent is the easy part. But finding the right place, with the right amenities, in the right neighborhood is a different story.

“As far as amenities go, central air is mandatory. Millennials also seem to veer towards buildings with fitness centers. They’re known to work long hours, so to have the convenience of a gym in their building is huge. Plus, they don’t have to pay for a gym membership,” Bonneau said.

In regard to the neighborhoods that millennials are drawn to in Chicago, Bonneau says there’s an up and coming area they’re flocking to.

“A lot of people are moving to Logan Square. The area has done a complete 180 recently, as it used to be somewhat grungy. Now, it’s a popular destination. Thousands of apartment units are going up,” she said.

But that isn’t the only place that millennials are moving to. Both Lincoln Park and Lakeview are still very desirable spots in the city. Bonneau said, “Lincoln Park has DePaul, which brings a lot of millennials. The apartments there though are vintage – meaning carpeting, no dishwasher and no central air. If you find an updated place, the price goes way up. Same goes for Lakeview, which is still a hot spot because of Wrigley Field and the lake.”

Vintage apartments are becoming rarer as time goes on. High-rises are slowly starting to take their spot, which seems to be a good thing according to millennials’ needs and the amenities they are looking for.

At some point, renting has to end. According to Bonneau, most people have a plan to rent somewhere between one and three years before they even think of buying. For some, it would be possible to buy after that amount of time, but for others it might not be. However, banks and the City of Chicago are trying to solve that problem.

“Students have an enormous amount of debt coming out of college. A majority of them do not have the right amount of money for a down payment on a house or condo. To solve this, banks are coming up with programs where individuals only have to give one to three percent of a down payment. But you have to have a work history to qualify, which is tough for people right out of college,” Bonneau told us.

The City of Chicago is trying to solve this problem as well by offering a neighborhood program for down payment assistance. It varies depending on the neighborhood, but the city could give prospective homeowners $3,000 or more, as long as they agree to live in that place for a certain number of years. That money doesn’t need to be paid back.

As for Bonneau’s advice to millennials, she says the most important thing is to save.

“Start saving money for a down payment. Work with a mortgage broker. Rent has gone up 62 percent since 2005 in Chicago, which is one of the highest rates out of any city in the country,” said Bonneau. “If people were more educated about the market, they would buy. But down payments, having a job history, stability and student debt are preventing millennials from buying. So my advice is to rent and save until you can buy.”