Owners display a preference to stay put. The number of existing homes for sale continued to abate in January, reaching just 850,000 houses, compared to an average of 1.7 million listed homes during the same month from 2015-2019. There are several factors driving this trend, affecting both buyers and sellers. Very strong buyer demand for larger living options like single-family houses, to assist with at-home work and learning, has squeezed for-sale inventory and driven up prices. The rapid appreciation has made it difficult for owners to move up the quality stack and concurrently free up their entry-level homes. Also, the typical generational swap, where older residents downsize or enter age-restricted communities, has been temporarily stalled, as virus concerns make the older cohort hesitant to live among others.

Extended renter cycle a longer-term trend. Home prices are not expected to drastically decline in the foreseeable future, as buyer demand sustains upward pressure. As such, the majority of younger millennials, along with Gen Z, will likely rent longer into their lives than the previous generations, due to the difficult transition to ownership, as well as a fondness for the flexibility and lifestyle that apartments can provide. This will keep multifamily vacancy tight and could also benefit self-storage. People accumulate items as they age and start families, and they may require more storage space than apartments can offer, especially in dense urban areas.

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*Sources: Marcus & Millichap Research Services; Capital Economics; Freddie Mac; Moody’s Analytics;

Mortgage Bankers Association; National Association of Home Builders; National Association of

Realtors; RealPage, Inc.; U.S. Bureau of Labor Statistics; U.S. Census Bureau; Wells Fargo