Renter households are trending older, wealthier, and are more likely to be parents, according to America’s Rental Housing 2017, a new report compiled by Harvard University’s Joint Center for Housing Studies. But while increased demand and housing inventory shortages have driven a surge in high-end apartments and single-family homes, the more affordable side of the market is lagging behind.
According to Harvard’s study, renting is attracting more and more people who could afford to become homeowners, if they so desired. Harvard reports that in 2006, 12 percent of households earning $100,000 or more were renters. By 2016, that had jumped to more than 18 percent, “a cumulative increase of 2.9 million renters in this top income category.” However, even with this spike in wealthier renters, renting remains a staple for lower-income households. Harvard reports that 53 percent of households earning less than $35,000 rent their housing, and that number jumps to over 60 percent for households earning less than $15,000.
Moreover, Harvard found that nearly half of renter households are cost burdened. As Harvard’s report explains, “Addressing this affordability challenge thus requires not only the expansion of subsidies for the nation’s lowest-income households, but also the fostering of private development of moderately priced housing.”
All of this comes on the heels of a huge boom in single-family rental homes over the past decade or so. Between 2006 and 2016, the number of single-family homes available for rent increased to 18.2 million—a spike of nearly 4 million. According to Harvard, single-family homes now account for 39 percent of the nationwide rental stock.
However, availability of these SFR rental homes is diminishing. According to the American Community Survey by the Census Bureau, the number of single-family rentals (including detached, attached, and mobile homes) increased by only 74,000 units between 2015 and 2016. This was significantly below the 400,000 average increase between 2005–2015. Harvard explains that some of this drop-off is because much of the higher-end rental market is being dominated by multifamily units.
According to Harvard’s America’s Rental Housing 2017 report, “Even if the homeownership rate stabilizes near current levels, the number of renter households is likely to continue to increase at a healthy clip, driving up the need for additional supply. And given that a broader array of households has turned to renting, this also means a growing need for a range of rental housing options.”
You can read Harvard’s full report by clicking here. And be sure to register for Five Star’s 2018 Single-Family Rental Summit to dive deeper into this topic, happening March 19-21, 2018, at the Renaissance Nashville Hotel in Nashville, Tennessee.