Marriage Decline and Cohabitation Rise: Unlocking Undervalued Opportunities in Consumer Markets

The American marriage landscape is undergoing a quiet revolution. Marriage rates have plummeted from 58% in 1995 to 46% today, while cohabitation has surged to 9.1% of adults—a trend expected to hit 16% by 2040. This societal shift is reshaping consumer behavior, creating fertile ground for companies that cater to the needs of unmarried couples and non-traditional households. Below, we explore how this demographic evolution impacts key industries and identify undervalued companies poised to thrive.

The Cohabitation Economy: A New Consumer Paradigm

Cohabiting couples, often younger, less educated, and racially diverse, prioritize affordability and flexibility over long-term commitments. They are less likely to buy homes or invest in traditional family-centric services, shifting demand toward rentals, budget-friendly retail, and urban mixed-use spaces. Meanwhile, married couples, though fewer, still report higher satisfaction and economic stability—yet their numbers are shrinking fast. This bifurcation creates opportunities for businesses targeting both groups:

• Lower-income cohabiters demand cost-effective solutions (e.g., secondhand goods, rental housing).
• Married households seek premium, relationship-centric services (e.g., luxury home upgrades, family travel).

Housing: Betting on Rentals and Resilience

The housing market is in flux. While traditional homebuilders face margin compression, companies adapting to cohabitation trends are emerging as winners:

1. Lennar (LEN):
   Despite a 7% revenue drop in 2025, Lennar's asset-light strategy (0.1 years' land supply) and strong liquidity ($5.4B) make it a survivor in a slowing market. Its P/E of 6.8x is a bargain compared to its five-year average.
   

2. Toll Brothers (TOL):
   Trading at an 8.1x P/E, Toll Brothers is pivoting to single-family rentals (9.5% growth potential) and manufactured housing. Its backlog dropped 13% to $6.5B in 2025, but its niche focus on high-growth segments offers long-term upside.

3. American Homes 4 Rent (HOME):
   This single-family rental REIT benefits directly from the cohabitation boom. With a 4.5% dividend yield and exposure to 44,000+ properties, it's a play on rising demand for affordable housing.

Retail: From Malls to Mixed-Use Innovation

The death of traditional retail has been exaggerated—but its revival requires reinvention. Winners are those blending convenience, sustainability, and experience:

1. Mixed-Use Developments:
   Companies like Brigade Capital Management (developer of Brigade Gateway) are transforming urban spaces into hubs combining apartments, retail, and offices. These projects cater to cohabiting millennials seeking walkable, social environments.

2. Tech-Driven Retailers:
   Firms leveraging BOPIS (Buy Online, Pick Up In-Store) and AR/VR integration thrive. Amazon's dominance in delivery and Walmart's omnichannel strategy highlight the need for agility in a “bring-it-to-me” world.

3. Sustainability Plays:
   LEED-certified properties and energy-efficient materials (e.g., solar panels) are no longer optional. Construction material leaders like Martin Marietta (MAR) and Vulcan Materials (VMC) are undervalued yet critical to green infrastructure projects.

The Undervalued Dividend Champions

For income-focused investors, two sectors stand out:

• Industrial REITs: Prologis (PLD), a leader in logistics real estate, benefits from e-commerce growth and has a 1.9% dividend yield.
• Senior Housing REITs: Welltower (WELL) targets the 20% of Americans projected to be over 65 by 2030, offering a 4.2% yield.

Risks and Considerations

• Economic Sensitivity: Cohabitation-linked businesses (e.g., rentals, budget retail) may underperform in a recession.
• Policy Shifts: Legal recognition for cohabiters (e.g., tax benefits) could accelerate demand but also introduce regulatory risks.
• Demographic Timing: While cohabitation trends are clear, execution risks remain for companies in cyclical sectors like homebuilding.

Final Verdict: Invest in Flexibility and Niche Mastery

The decline of marriage and rise of cohabitation are here to stay. Investors should prioritize:
1. Resilient Housing Players: Lennar, Toll Brothers, and American Homes 4 Rent for their adaptability.
2. Mixed-Use Developers: Brigade's projects and Prologis's logistics networks capture urbanization trends.
3. Sustainable Infrastructure: Martin Marietta and Vulcan Materials for their role in green growth.

Avoid overvalued mall REITs and traditional wedding planners—these are relics of a bygone era. Instead, bet on companies that thrive in a world where living arrangements are as diverse as the people themselves.

The marriage decline isn't just a cultural shift—it's an investment roadmap. Follow the data, not tradition.