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Does an Increase in First-Time Homeownership Mean Trouble for the Rental Industry?

Blog Post01/15/2020
Business
Banner image for blog titled Does an Increase in First-Time Homeownership Mean Trouble for the Rental Industry?

First-time homeownership is on the rise. According to a recent TransUnion projection, at least 8.3 million first-time homebuyers will enter the mortgage market between 2020 and 2022. That number could reach 9.2 million if economic growth exceeds expectations — a significant acceleration from the 7.6 million first-time homebuyers added in the last three-year period (2016–2018).

Number of first-time homebuyers is expected to rise in the next three years

Three-Year Date Range

2020-2022*

2016-2018**

2013-2015

2010-2012

2007-2009

Millions of First-Time Homebuyers (Originations)

8.31 to 9.20

7.64

6.67

6.32

6.75

*Projection
**Note that as 2019 has yet to conclude, we have not included it.

In a LendEDU survey, 89% of non-homeowning Millennials between the ages of 23 and 38 wish to become a homeowner at some point. Most of these aspiring, first-time buyers are renters relying on good credit scores for mortgage loan approval.

Help renters boost credit scores to attract and retain quality residents

As discussed in this recent blog, making on-time rental payments are instrumental in helping raise renters’ credit scores. However, rental payment reporting is usually left to landlords and property management companies. This process could realistically push increasingly conscientious renters to look for properties that offer such a service.

Why property managers should care about home buying trends

So, why should rental property managers be concerned about first-time homebuying trends? Generally speaking, rental occupancy and homeownership rates have a strong correlation: When rental occupancy dips, homeownership rises and vice-versa. Therefore, if homeownership experiences a resurgence, it could impact demand and revenue for property operations.

Having insights and knowledge about specific industry trends can help you make better decisions about everything from new services and amenities to marketing and rental rates. See how TransUnion ResidentVisionSM can help you make multifamily investment, acquisition and asset management decisions with more confidence.

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