This article originally appeared on the Anthem Vault Blog.

By: Chris Kuiper

Millennials are having a tough time finding an affordable house or apartment to rent as they start their lives and careers. A recent report found most rental homes were unaffordable for millennials in 23 of the largest 50 cities in the U.S. The reason is simply supply and demand. But what is driving the demand for rentals and what, if anything, can you do about it?

1. The homeownership rate is back where it was 20 years ago, before the campaign to encourage homeownership began.

A chart of U.S. homeownership clearly shows the government-influenced boom to get people to own their own homes and then the resulting bust. It appears there may be a natural rate of homeownership due to the fact that some people will always be renters, such as students, those moving to new cities or young people starting their careers. Trying to artificially increase the homeownership rate beyond this natural rate cannot last indefinitely. Once the bubble popped, all those who owned homes – who normally wouldn’t have been homeowners – came rushing back into the rental market.

2. Millennials are now competing with baby boomers for rental units.

As if it wasn’t enough to compete against other millennials and those still scarred from the housing bubble, rental demand is also being driven by baby boomers looking to downsize or have a more convenient lifestyle. According to a recent Bloomberg article, the sheer size of the baby boomer generation is likely to keep up demand on rental units for the foreseeable future.

3. The middle-aged and middle class are renting too.

Households between the ages of 45 and 64 accounted for about twice the share of renter growth as compared to those younger than 35. Also surprising is the fact that households in the upper half of income distribution contributed 43% of the growth. These are the two groups that traditionally are the most likely to own a home. It’s not entirely clear why, but it’s likely it relates to these traditional homeowners getting burned in the last housing bust and choosing to rent while they repair their finances.

4. Millennials can’t afford a down-payment.

Not only are millennials facing poor job prospects and a lower inflation-adjusted income than previous generations, but the biggest hurdle continues to be student debt. The class of 2015 just graduated with an average student loan balance of over $30,000. This translates into a monthly expense of over $300 for borrowers on a 10-year repayment plan. This makes it difficult to save up for a traditional 20% down payment. An average home price of approximately $200,000 translates to a $40,000 down-payment, in addition to fees and commissions.

Keeping reading at Anthem Vault.