Moving out on El Molino in Pasadena (File Photo – Emmanuel Kraultez).
Los Angeles, San Diego and New York have the highest share of renters.
By News Desk
The number of renter households in America grew 1.9% year over year in the second quarter to a record 45.2 million, according to a new report from Redfin, the technology-powered real estate brokerage. That’s three times faster than the number of homeowner households, which grew 0.6% to a record 86.3 million.
Growth in the number of renter households hit a peak of 2.8% in the first quarter of 2024. That was the largest gain since 2015.
This is based on a Redfin analysis of U.S. Census Bureau data going back to 1994. A renter household is defined as one where the head of the household reports to the Census that they are renting the property, while a homeowner household is one where the head of household reports they own the property. The number of homeowner and renter households are both at record highs because the U.S. population is at a record high.
Renter households have formed faster than homeowner households for three straight quarters, partly because homebuying costs have risen much faster than rents.
The median apartment asking rent increased less than 1% year over year in June, while the median monthly mortgage payment jumped roughly 5%.Asking rents were 23% above pre-pandemic (June 2019) levels, while mortgage payments were 90% above pre-pandemic levels.Over Half of Households In Los Angeles Rent—the Highest Rate in the U.S.
Nationwide, just over one-third (34.4%) of households in the U.S. are renter households—a figure that has remained fairly steady over time. The share is much higher in coastal metros where it’s expensive to buy a home.
Los Angeles has a renter rate of 53%—the highest among the 75 largest U.S. metropolitan areas. It’s followed by San Diego (52.4%), New York (50.1%), Fresno, CA (49%) and Austin, TX (46.3%). Fresno is the outlier in the group; it’s not nearly as expensive as, say, Los Angeles or San Diego. But over 20% of residents in Fresno County live below the poverty line—nearly double the statewide share—making it challenging for many people to own a home.
Building a lot of apartments to keep pace
“The cost of both renting and buying a home has skyrocketed in recent years, but the affordability crunch isn’t quite as severe in the rental market. That’s because America has been building a lot of apartments to keep pace with robust demand from renters,” said Redfin Senior Economist Sheharyar Bokhari. “The country’s leaders should heed this lesson when considering how to improve affordability in the homebuying market: When there’s more housing to go around, prices don’t increase as fast.”
The U.S. has been on a multifamily building spree, but that could come to an end soon. America has added a lot of renter households over the past year—855,000, to be exact. But it also has ramped up construction, which has helped accommodate that rise in demand and limit rent growth. The country is adding new multifamily housing units at an annual rate of 563,000 (as of the second quarter)—the second fastest pace in records dating back to 1994. The fastest pace was in the first quarter of 2024, but multifamily building permits and starts have slowed significantly, which could cause rents to jump again in the coming years.
The U.S. still faces a housing shortage, but the recent boom in multifamily construction has helped narrow the gap. Multifamily building completions are at historic highs because many projects started during the pandemic housing frenzy are just now being finished.
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Publish date : 2024-08-05 20:57:00
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