Millennials Drive Demand for Multi-Dwelling Housing Units

The rise of the Millennial generation is poised to change the face of Knox County's housing mix.

As Millennials - people currently 18 to 34 years old - come of age, finish their educations, and leave their parents' homes, they are driving new demand for multi-dwelling housing units.

Millennials are already the largest demographic segment in Knox County, and the group is growing faster than any other. Facing a tough employment market and tight lending practices since the mortgage crisis, many members are opting to rent apartments rather than buy homes while they establish careers, pay student loans, and accumulate the wealth needed for home ownership.

Historically, Knoxville and Knox County have seen a mix of housing that showed a strong preference for single-dwelling units. From 1990 to 2013, that mix was steady with about 75 percent of housing in single-family homes, condos, or mobile homes, while multi-dwelling units accounted for around 25 percent of stock.

Until recently, there has been comparatively limited growth in new apartment supply. Rent rates have reacted strongly to the increasing demand, rising 26 percent over the last few years. Despite the price hike, apartments in Knoxville and Knox County are still almost 94 percent occupied.

Investors have taken note of the rising demand for multi-dwelling units. More than 2,400 units are currently in the proposal, design, or construction phase locally. Evolve on Cumberland Avenue and a project in the former While Lily building on Central Street are expected to be completed this fall and just last week ground was broken on the Marble Alley project on State Street. Completion rates are poised to overtake production of the last decade when deliveries averaged 530 new multi-dwelling units per year.

For more information, see the full technical report: Multi-Dwelling Housing Trends in Knox County Tennesseeor contact Bryan Berry.