Renter households grow rapidly as homeownership declines

In the United States, the trend of increasing rental households has gained momentum, with a reported rise of 2.7 percent year over year as of the third quarter of 2024. This trend reflects a growing divide in housing options, as the number of renter households reached a record 45.6 million, while homeowner households grew at a much slower rate of 0.9 percent, totaling 86.9 million. The disparity in growth rates highlights a significant shift in housing preferences, driven largely by soaring home prices and elevated mortgage rates, which have made homeownership increasingly unattainable for many young people and families. The high cost of buying a home, which has surged by more than 10 percent, has led to fewer households making the transition to homeownership. The rental market has become the only viable option for a substantial segment of the population, particularly in expensive metropolitan areas like San Jose and New York City, where rented properties constitute the majority of households. In San Jose, rented homes comprise 52 percent of all households, followed closely by other cities in California and New York, which have rentership rates exceeding 47 percent. Redfin's senior economist, Sheharyar Bokhari, noted the changing priorities among younger generations, suggesting that the desire for homeownership may not be as strong as it once was, indicating a potential long-term increase in renter households. An Oct. 15 report from Zillow emphasized the affordability challenges faced by renters, with the median rental household spending approximately 30 percent of its income on rent, often leading to financial strain. As affordability problems persist, property managers are responding with an increase in rental concessions, such as waived fees and promotional offers. Moreover, there is a growing call for the implementation of rent control measures to mitigate rising rents. A survey conducted by Redfin revealed that a significant majority of American residents—82 percent—are in favor of limits on how much landlords can raise rental rates. The urgency for these regulations is reflected in bipartisan support, where 86 percent of Democrats and 79 percent of Republicans voiced their agreement on the need for rental rate caps. The White House has also proposed policies to limit rent increases to 5 percent, further highlighting the ongoing concerns regarding housing affordability. Ultimately, increasing the availability of rental units appears to be a critical step toward making housing more affordable for future generations.