US Renter Households Growing Multiple Times Faster Than Homeowner Properties

A home awaits buyers in Irvine, Calif., on Sept. 21, 2020. John Fredricks/The Epoch Times

The number of renter households across the United States rose by 2.7 percent year over year in the third quarter, reaching a record 45.6 million households, according to a Nov. 5 report from the real estate brokerage Redfin.

“That rate of growth is three times faster than the 0.9 percent increase in homeowner households, which now total a record 86.9 million,” the company said in the report. “The 2.7 percent increase—representing 1.18 million additional renter households—was the second fastest pace since 2015.”

The number of renter homes has been increasing at a faster pace than homeowner households for the past four quarters owing to high purchase prices, the brokerage said.

Over the past two years, rents have mostly remained stable while wages increased by around 4 percent per year. In contrast, house prices grew by more than 10 percent, according to Redfin.

Amid the high cost involved in buying, home ownership transfers have fallen. In the first eight months of this year, only 2.5 percent of houses changed hands, the lowest in decades.

More than a third of households nationwide are rented properties. The share of renting is higher in places such as New York and metros in California where homes tend to be more expensive.

In San Jose, California, rented properties make up 52 percent of all households, the highest among the 75 largest metropolitan areas in the country. It was followed by Los Angeles, New York, San Diego, and Fresno, all of which had a rentership rate exceeding 47 percent.

“With home prices at record highs and mortgage rates remaining elevated, renting is increasingly the only viable choice for many young people and families,” Redfin senior economist Sheharyar Bokhari said. “Building more homes will help address that, but we also have to recognize that Gen Z and future generations may not view homeownership as a life goal and the rentership rate may continue to rise for years to come.”

An Oct. 15 report from Zillow pointed out that the median U.S. rental household spent around 30 percent of its income on rent costs, a level that is seen as the typical threshold of affordability. Beyond 30 percent, individuals end up financially struggling to meet other needs, it noted.

“As affordability challenges for renters persist, property managers are taking notice. The share of rental concessions on Zillow—short-term offers like weeks or months of free rent, or waived amenity fees—continues to climb,” the report said.

Rent Cap Policies

There have been demands for implementing rent control measures. An Oct. 24 survey from Redfin found that 82 percent of American residents want limits on how much landlords can increase rent rates.

Earlier in July, the White House had proposed a rent control policy, with President Joe Biden calling on corporate landlords to cap the raising of rents to 5 percent.

The demand for rent caps cuts across party lines, with 86 percent of Democrats and 79 percent of Republican respondents agreeing on such limits. Experts say these measures could negatively affect the housing market.

“Rent control sounds appealing for renters in theory because it limits price increases and saves money in the short term, but it eventually worsens rental affordability because it exacerbates the supply shortage,” Redfin economic research lead Chen Zhao said. “If rent increases are capped below the amount developers would need to make a profit, they have little incentive to build more apartments and homes. The best way to make rentals more affordable is to build more units.”

In April, California approved a rule targeted at developers of low-income housing in the state who received tax credits for their projects. These developers can raise rents by a maximum of 10 percent annually.

During a recent interview with EpochTV’s “American Thought Leaders,” James Burling, vice president of legal affairs at the Pacific Legal Foundation, noted that rent control policies have been a “disaster” wherever they have been implemented. He also raised concerns about the power that governments would hold in such conditions.

“We start taking away property rights, and then it becomes easier for government to control us,” Burling said.