The rental property market landscape is constantly evolving. Looking for a new rental property can be a daunting task. For some, it’s difficult to decide between buying or renting a property. There are many factors to consider before deciding which is best for your lifestyle. It’s important to understand the upsides and pitfalls of renting versus buying before you come to a conclusion. The statistics below are intended to help those who are considering how to approach the rental property market.
44 million U.S. households rented their homes in 2019. A majority of which were between 30 and 44 years old.
Fewer and fewer American families are having children. The number of households made up of families with children has decreased by a noticeable 1.3M since 2010.
Individual investors account for 74.4% of rental properties. Rental properties can be a lucrative business that more people are starting to dabble in.
91 of the 100 largest U.S. cities have seen rent increases over the last year.
The most expensive rents are found in the northeast and western regions of the United States. This is where some of America’s biggest cities are: New York, Los Angeles, and San Diego.
Prices for smaller rental units are increasing the most in the Western part of the United States (3.4% for studios and 3.5% for one-bedrooms). California plays a large role in that.
In the South and Northeast states, one-bedroom rental unit costs are growing at nearly the same rate (2.9% and 2.4%, respectively).
The cost of a two-bedroom rental unit is rising fastest in the South (2.4%), followed by the West (1.2%).
Three-bedroom rental units in the West have the steepest price growth seen this year so far in 2020 (4.7%). Once again, this increase can be mainly attributed to California.
The West is the only region showing across-the-board growth in rent prices with no decreases.
In the Midwest, the larger rental units have lower cost thresholds (2.7% increase for studios, 1.6% for one-bedrooms, 0.5% for two-bedrooms and -2.7% for three-bedrooms). It is the only region in the U.S. to reflect this trend.
Phoenix had the highest year-over-year rent price increase at 6.7%. Warm weather climates are experiencing rent increases across the country.
Salt Lake City, Indianapolis, and Charlotte saw the strongest annual home value growth from 2018 to 2019.
Cities on the Northeastern coast have the highest concentration of renters in the country today. Rapid job growth, continuously expanding local economies, and increasing costs of living have all contributed to the ever-increasing popularity of renting.
A decade after the housing bust upended the lives of millions of Americans, more U.S. households are headed by renters than at any point since at least 1965. 36.6% of households are renting their home.
In the first half of 2018, the renters of unfurnished apartments in the U.S. paid a median price of $1,588 per month. Needless to say, rents vary from region to region.
Nationally, rents were up 2.9% year-to-date in 2019, raising 0.3% in the third quarter alone.
Low-end rent prices were up 3.4%, compared to high-end price gains of 2.5%. It doesn’t matter what kind of unit you’re renting – the rent is increasing across the board.
In 59% of U.S. metros studied in a 2019 report, renting a three-bedroom property is less expensive than purchasing a median-priced home. That’s a whopping 442 out of the 755 counties, according to the report.
Renting is a more affordable option in 18 of the nation’s most populated counties and 93% of counties with a population consisting of more than 1 million people. If you plan on living in a major city, you should also plan on renting.
The number of Americans who rent reached 108.5M in 2018, up from 99.4M in 2010. This decade has seen years of sustained growth.
The share of renters now makes up 34% of the general population and is the largest it’s been since 1960, when 36% of Americans were tenants. By comparison, there were 202M homeowners in 2018, up from 189M in 2010.
On a national level, renting shot up in popularity in the past decade. Since 2010, the number of renters has increased two times faster (+9.1%) than the number of homeowners (+4.3%), signaling a considerable shift in the American lifestyle.
20 U.S. cities made the switch from a homeowner majority to a renter majority in the past ten years, pushing the share of renter-majority cities from 28% to 32%.
Suburbs added renters at a faster pace (+17%) compared to cities (+14%) in the past decade. Since the suburbs come with less crowded neighborhoods, good schools, and cheaper homes, an increasing number of renters are settling into suburban life.
2.4M units were delivered this decade, in a construction boom unseen since the 1980s.
Zumper reports that on a year-to-date basis, both one and two bedroom rents are down 0.5%. This can be attributed to the pandemic and businesses’ forced shut down.
Home Ownership Statistics
In 66% of housing markets, buying is more affordable than renting. This could change if mortgage rates continue to climb.
Home values grew 5.2% year-over-year in 2019, down from 7.6% annual growth in 2018.
For-sale inventory in the U.S. fell 0.8% annually in 2019. There were 12,128 fewer homes for sale than in June 2018.
Home prices are climbing faster than wages in 80% of U.S. markets. In fact, median home prices increased at a faster pace than average weekly wages in 601 of the 755 counties analyzed.
Median Rent Statistics
In 2017, the median U.S. rental was taking 29.1% of the typical household income (up from 25.8% in 2000). Renters in 34 of the nation’s 35 largest markets spend a larger share of income on rent now than they did historically.
In 2019, the median asking rent reached an all-time high of $1,002, with 1 bedroom rentals costing $959 and 2 bedroom rentals costing $1,190. The median will most likely continue to rise year-over-year.
Rental Vacancy Rate
The rental vacancy rate in the first quarter of 2018 and 2019 remained consistent at 7%. This number has remained steady around 7% over the past five years.
In the first quarter of 2020, 6.6% of rentals were vacant compared to 1.1% of homeowner-occupied housing. This could be due to the fact that renting is a more affordable option and, therefore, some renters might rent multiple properties.
The average apartment occupancy rate in the U.S. rose to 96.2 percent in July of 2019, up 40 basis points from the year before, according to RealPage. That’s the highest the occupancy rate has been since 2000.
The average renter credit score in 2017 was 620. Statistics show that the average credit score decreases year after year.
People earning at least $100,000 per year represent the fastest-growing segment of the U.S. housing market. This group grew 48 percent from 2008-2017, when nearly 2 million high-income households became renters.
The rise of high-income renters has been most dramatic in mid-size, growing metropolitan areas, particularly Denver (146 percent growth), Austin (142 percent), and Oklahoma City (121 percent).
The growth of high-income renters is slower in America’s largest and most expensive markets, including New York (26 percent), Los Angeles (33 percent), and San Francisco (65 percent).
By 2017, there were a total of 1.8 million new high-income renter households. 960,000 of these households occupied multi-family units and 860,000 occupied single-family units.
Nationally, the number of households earning more than $150,000 per year who rent increased two times faster (+157%) than the number of high-earning homeowner households (+78%) since 2010. More wealthy Americans choose renting over homeownership.
Globally, the most expensive place to rent is San Francisco, where the rent averages out at $3,690. New York and London are the number two and three most expensive rent cities.
In 2019 alone, U.S. renters paid $512 billion in rent. Renters in New York ($56.6 billion), Los Angeles ($39.2 billion) and San Francisco ($16.4 billion) paid the most.
According to Zillow, U.S. renters paid roughly $4.5 trillion in rent during the last decade, more than the 2018 GDP of Germany.
According to Harvard, the number of low-cost units renting for under $600 fell by 3.1 million and the supply of new units from $600 to $1000 fell by 450,000 units.
Renter Population Statistics
Share of renters make up 34% of the general population, which is the largest it’s been since 1960, when 36% of Americans were tenants. By comparison, there were 202 million homeowners in 2018, up from 189 million in 2010.
The renter population grew twice as fast as the owner population in 2019. This signals a significant shift in the American lifestyle.
The increase in the number of renters at national level in a decade’s time was only slightly slower than the total population growth over the same period, demonstrating a big swing toward renting.
Apartment Rental Statistics
Apartment living is the most popular among renters. More apartments are being built in greater numbers because there is a rising demand for that type of living.
In the past decade, the number of American households renting apartments has increased by 10.8%, a slight 0.2% more than renters living in single-family units. Today, almost two-thirds of renters live in multi-family units.
On a national level, the average size of newly built apartments decreased by 57 square feet or the size of a medium bathroom in the past ten years. Apartments are getting more expensive and smaller in size simultaneously.
45.5% of landlords in England own just one buy-to-let property. These properties make up 21% of the private rental market.
In England, 79% of buy-to-let properties are owned by portfolio landlords.
More and more English landlords are buying multiple properties. In 2010, only 19% of landlords had more than one buy-to-let property. This figure now stands at 55%.
Renting in Cultural Districts
Cultural districts command up to 176% higher rents. Very few of them are cheaper than the city average.
Artists who live in cultural districts pay about $380 more per month in rent than the city average.
The average rent in Houston’s Museum District costs about $1,900 more than the average rent in the city. The Museum District was drowning before massive investments reshaped it into a place dedicated to art and culture.
Artists living in 14 of the 49 cultural districts in the 20 largest American cities are heavily rent-burdened, with a rent-to-income ratio of 50% or higher. Half of them are actually bearing a rent burden of over 60%.
Renting Your Perfect Home
Deciding whether to rent or buy a property is a difficult decision. There are plenty of factors that come into play, which ultimately makes the choice very subjective. The above statistics are intended to help those who are in between. Renting and buying both have many upsides and pitfalls. It’s about figuring out which one fits best into your lifestyle. These statistics are intended to provide valuable insights to future renters and buyers.