Suburban apartment occupancies are the highest they’ve been since 2007, and they’re showing no signs of falling any time soon. According to Chicago Real Estate Daily, the suburban occupancy rate rose to 95.3% in the Chicago suburbs in the fourth quarter of 2014, the highest it’s been in seven years. Data has not yet been released on the first quarter of 2015, but the number is only expected to rise.
Job Market Boosts Demand For Housing
Why such a high apartment occupancy rate, you ask? It’s partially because an improving job market means young people can afford to move into their own apartments. While the deflated economy meant that recent grads had to spend years dwelling in their parents’ basements before they could begin lucrative careers, they’re now having less trouble and more are making the shift straight from college campuses to their own apartments.
Suburban Apartment Occupancy Illustrates Renting Preference
Apartment occupancy has always been higher in cities, however, where renting is the norm and home ownership is slightly less common. Its prevalence in suburbs shows that people are leaning towards renting instead of buying when it comes to housing.
This shift from buying to renting initially began with the recession, when real estate prices meant that many families could not or did not want to buy property. Its resilience in a once-again healthy economy points to more than fear of home ownership for this change, however.
Despite Costs, Most Millennials Prefer to Rent
One such group of suburban renters is Millennials, who prefer to live close to where they work and go out. Most are getting married and starting families much later than baby boomers, and older Millennials who have started families generally take a more untraditional approach and continue renting.
According to the Washington Post, 30% of Millennials say they never plan to buy a home or don’t plan on doing so in the near future. This is partially due to student loan debt and flat wages, but it also reflects the generation’s desire for flexibility and convenience and the dissipation of the American dream as we know it.
Rent is on the Rise
In the wake of such high renting occupancy rates, there has been some apartment development to increase supply– but not that much. As a result, the occupancy rate has risen above 95%, the number that signifies the market is full.
This high demand and limited supply situation means that housing prices are also higher than they’ve been in the past; in fact, the suburban net rent is at an all-time high as well.
Demand Draws In Developers
That being said, apartment developers aren’t blind to the opportunity the rise in demand has created. Thousands of new apartments are being constructed in response to the improved job market at still lower-than-average buying rates.
It’s unlikely that supply will exceed demand any time soon, but this will help keep rent from skyrocketing– a principle that’s important to renters in both city and suburban life.
With suburban occupancy rates on the rise, it will be interesting to see what burgeoning downtown districts spark in areas once reserved for families. Regardless of where young people are living– in urban areas or suburban ones– the continued preference of renting over buying signifies that price isn’t the only thing that matters.