Like any investment, multifamily real estate returns are primarily a function of projected future income growth. The shifting balance of supply and demand largely drives projected future income for multifamily real estate. However, unlike many investments, overall demand for multifamily is well-defined as a basic human need, well-measured by consistent and timely reporting of demographic and geographic information, and comfortably anticipated by the dependable movement of people and jobs. While individual multifamily investments are undoubtedly subject to local market dynamics, a broad perspective of multifamily demand helps illustrate one of the core tenets of CONTI’s multifamily strategy: invest in regions where population and jobs are poised to grow. At the root of this growth is the largest generational cohort of Americans, the generation of future renters, “Generation Z.”
Generation Z, or the group of Americans born after 1996, can trace its magnitude to the U.S. Baby Boom from 1946 to 1964, following the return of American soldiers from World War II. At over 72 million people, the “Boomer” generation was the largest cohort of Americans until the arrival of their grandchildren, Generation Z. Fueled by the massive population of Generation Z, the demand for U.S. housing will only continue its steady and rapid expansion throughout the next decades. This growth in sheer demand is also accompanied by Gen Z’s increased educational attainment, shifting housing preferences, tightening household budgets, and delaying life events that consequently delay homebuying. With these critical changes, Generation Z will not only be the largest cohort of renters the U.S. has ever seen but also the cohort most likely to rent longer than any before it.