Guess Who's Driving the Demand for Rental Apartments?




By Diana Olick, CNBC Real Estate Reporter

NEW YORK ( CNBC) -- The housing market is supposedly roaring back. Home prices are seeing their biggest annual gains since 2006.

Renters must be rushing back to buy, right?

Not exactly.

In fact, even as housing and the greater economy improve, a shift in demographic trends will likely favor the rental apartment market for the foreseeable future. It is all about women.

"I rent in an apartment building because it gives me a certain amount of freedom: I'm not positive that I want to stay in D.C. long term so I could leave at year's end if I wanted to," says 25-year-old Caitlin Huey-Burns, a working journalist. "My building has nice, built-in amenities, and it's in the location I want, but where I know I wouldn't be able to afford to buy."

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Most of Huey-Burns' single, female friends, some in their thirties, who live in major cities, also rent in apartment buildings. Just one owns, and she lives in Canton, Ohio.

"What drives demand for single family homes is, 'Oh honey, I'm pregnant," says Buck Horne, a housing analyst at Raymond James.

But those words are being uttered less and less. Horne claims the shift in female education, marriage and fertility rates will drive rental apartment demand going forward. He points to a growing educational imbalance, that is, 3.1 million more women enrolled in college than men and 4 million more college-educated women in the workforce than men.

"That creates a structural imbalance in the number of suitable partners. Women leave college with good income prospects and are not finding suitable husbands and fathers," says Horne.

Consequently, the millennial generation is delaying marriage and motherhood, and birth and fertility rates are dropping. The female fertility rate is at its lowest level in recorded U.S. history, according to the Centers for Disease Control/Raymond James research. 41% of children are born out of wedlock. Horne's research finds single mothers prefer living closer in to cities and staying in full amenity apartment rentals. This all points to more structural, long-term demand for rental housing.