Real estate investors in DFW are in a unique position to benefit from the millennial mindset. Millennials comprise the generation reaching adulthood in the early 21st century. While there is no definitive range of birth years that define millennials (as is the case with baby boomers and Gen X’rs), millennials are now estimated to be in their mid-20s and early 30’s. It’s noteworthy that millennials are the most significant generation in history, even outnumbering baby boomers. This generation is also in a class by themselves about their sensibilities, culture, and beliefs. Real estate investors can massively benefit from the combination of the considerable influx of millennials and the vibrant DFW market.
Millennials Migrating to Texas
Just three years ago, millennials migrating into the Dallas Fort Worth area numbered 720,776, the sixth highest in the country. Overall, Texas experienced the highest numbers of millennials moving in, at a 5% increase over previous years. Austin saw the second highest numbers of migrating millennials, while Houston headed the pack. In fact, North Texas is the top millennial magnet in the United States. The millennial concentration in DFW makes up a whopping 23.6%. Houston’s millennial population is 24%.
Real Estate Investors With Single-Family Home Rentals Stand to Gain
There are lots of ways to benefit in real estate investing from the burgeoning DFW market. But single-family home rentals in DFW arguably provide the most lucrative opportunities right now, and much of it is due to millennials. Currently, millennials are at prime renting age. They’ve graduated from college and are starting out in their career jobs, earning the first “real” money they ever have.
Why Do So Many Millennials Prefer to Rent?
Many millennials prefer to rent instead of aspiring to own a home as their parents and grandparents did. It’s a phenomenon that developed partially as a result of the economic collapse of 2009. Many millennials were in their formative years when their parents lost their homes due to the mortgage meltdown. Millennials saw firsthand what could happen, and soured on the idea of homeownership. For the first time in history, home ownership isn’t necessarily the American dream for as many young people starting out in life.
A second reason why millennials are so eager to rent instead of owning is merely a matter of financial resources. Tuition costs have risen 213% since the mid to late 80’s when the parents of millennials attended college. Millennials are saddled with more college tuition debt than any previous generation. They have a much harder time coming up with the down payment necessary to buy a home, so they have to wait.
Why Millennials Make Great Tenants
All this bodes well for single-family home real estate investors. There is a massive pool of millennial renters in the DFW area. With population growth rates surpassing similar metro areas around the country, DFW promises to keep single-family home real estate investors flush with tenants.
Millennials make great tenants. In the DFW area, they are more likely to hold stable jobs at well-known, stable companies like Charles Schwab, Bank of America, AT&T, Lockheed Martin, and others. Their salaries are likely to be higher since many millennials in DFW work in professional or IT capacities. Tenant turnover is generally lower with millennials since they are building their careers and are less likely to quit. Millennials in DFW are also less likely to be laid off due to financial reasons because the business sector of DWF is experiencing—and is predicted to continue to experience—unprecedented economic gains and bottom level unemployment rates.
Millennials and the Technology Sector
DFW is a booming technology hub. Dallas Fort Worth is one of the top areas for technology companies in the country. Between 2011 and 2015, there was a 61% increase in technology degree holders in the area only because of the draw of the tech company giants. The metro region is home to dozens of the hottest tech firms in the nation, including Alkami, Dialexa, Lifeblue and Oculus, Facebook’s virtual reality spinoff. What does that have to do with single-family home real estate investors? The answer: Earning power.
Millennials who work in the technology sector—even entry-level jobs—stand to make above average salaries. For example, the average salary of a software engineer is over $81K. A network engineer makes over $65K on average. An IT consultant can bank $77K on average, while a senior software engineer makes an average of over $101K. Frankly put, millennials who work in IT make especially great tenants because they can easily afford to pay the DFW area rental rates on single-family homes.
This is a great time to be a millennial, but an even greater time to be a single-family home real estate investor in the Dallas Fort Worth area. Millennials have plentiful job opportunities in the largest growing metropolitan area in the country, and investors have a large pool of quality tenants to choose from. It’s a match made in Texas.