Soaring home prices keep many on the sidelines. Renters in need of more space and privacy are making house rentals their long-term homes.
The Houses That Renters Never Want to Leave
Point2Homes discusses The Houses That Renters Never Want to Leave
- Moving after less than 1 year is becoming less appealing: Compared to 2017, the number of house renters who spend less than 12 months in a home before moving fell 4.5% and decreased in 70 of the 75 metros we reviewed.
- The shares of renters who move after less than 12 months dropped the most in Bakersfield, CA (-12.4%); followed by Tucson, AZ (-10%); and Omaha-Council Bluffs, NE-IA (-10%).
- Long-term renting is gaining ground: More and more house renters are slowly but surely making the single-family home rental they currently occupy into what may be their forever home.
- Long-term and very long-term renters in California’s Riverside-San Bernardino-Ontario and Oxnard-Thousand Oaks-Ventura are leading the trend as their shares increased by more than 7% in the last 5 years.
- Space is no longer a preference, but a necessity: Nearly half of single-family renters (47%) gravitate toward spacious three-bedroom homes, making them the top pick for those seeking extra room to rent, according to the latest Census data on house renter tenure.
House Renters Spend More Time Before Moving
Of the 45,646,491 renter households in the country, 14,227,371 are single-family renter households. And they’re increasingly going the distance: According to Point2Homes‘ most recent analysis of Census data, renters who spend five to nine and 10+ years in their rental before moving increased by 2 and 2.7 percentage points, respectively. On the other hand, the number of renters who move after just 12 months fell -4.5 percentage points compared to five years ago.
High cost of living, supply scarcity, growing home prices and high mortgage rates make it impossible — or at the very least extremely difficult — for renters to start saving for a down payment, thereby keeping them renting for longer.
But it’s not just increasing home prices that are keeping renters put. Rental prices have also shot up in recent years, discouraging renters from moving, as that would require taking on a likely higher lease.
That’s obvious in the nation’s 75 largest metros: Throughout the last five years, the share of renters who move after less than 12 months decreased in all but four metros. What’s more, three metros are posting double-digit drops in the shares of short-tenure renters: In Bakersfield, CA (-12.4%); Tucson, AZ (-10%); and Omaha, NE (-10%), renters really seem to be rethinking their strategy and are staying put.
Census data is woefully lagging so we need to be a bit careful on such stale data.
But who really likes to move?
Based on falling prices of new leases, many claim “rent is falling”. But most people don’t move.
And the fewer people who do move, the more sticky existing rent prices are.
The Point of Renting a House
If Gen Z renters, young, single Millennials and downsizing Baby Boomers can make do with smaller homes, they’re not the majority. Most renters of single-family homes prefer the larger, three-bedroom houses for rent: Nearly half (47%) of all house renters opted for a roomy three-bedroom, whereas less than 10% went for a one-bedroom house for rent.
Net numbers are equally telling: Nearly 7 million renters live in three-bedroom houses, followed at a distance by the 4 million who choose a two-bedroom rental.
That’s because single-family homes for rent cater to a very specific demographic — renters who are kept on the sidelines, unable to buy a home big enough for their changing needs.
Where Do Renters Live?
- In 2023, 38% of renters in the US lived in apartment buildings with five or more units.
- Another 17% of renters lived in buildings with two to four units.
- The remaining 41% of renters lived in single-family homes.
- 5% of renters lived in mobile homes.
The above is an AI response to my question. Those who live in a big city apartment may be surprised that only 38 percent live in big apartment buildings.
People under the age of 30 comprised the largest share of renters in the U.S. in 2022. Almost half of the population that lives in a rental apartment fell in this age group.
According to research published earlier this year by John Burns Research and Consulting, remote work lives on: “Despite return-to-office policies, remote work remains about four times more prevalent than pre-COVID. […] the resulting outflow to more outlying areas is akin to the massive shifts caused by the car revolution of the 1950s and 1960s that opened up the first ring of suburbia.”
There’s much more in the article for those interested in renting and rental trends.
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I will closely be watching shelter.
I remember renting back in the early 90’s and the only reason you would move is to get a better deal elsewhere, but it was always a pain. If your rent went up a few dollars, then you would probably stay where you were – otherwise, you would move elsewhere for a better deal only if forced to do it.
People may be renting due to lack of down payment affordability, or they may be renting because they expect house prices to fall, and don’t want to be bag holders.
A lot of people got burned badly in 2007-2011 and won’t be keen on doing it again.
Full time jobs are down 1.8 millions. CRE occupation rate is 50% below 2019, before covid. CRE was subjected to systemic change first.
Just wait till 1.5 million govies join them… labor will get cheap!
If WFH is 3 days a week and in the office 2 days a week ==> CRE is an expensive cost center doing nothing 5 days/ per week.
For keyboard warriors, it’s always been that way, 7 days a week. Sure.. they’re in that office, but if anything it decreases productivity.
I like to watch them come in all traumatized by their commutes. Reminds me of how important I am that I can make them do it. Ever now and again one dies on the road and the thought of him sacrificing his very life for my gratification is pure triumphant joy!
And that’s only the beginning of what I have in store for them…
Surprisingly enough, a lots of CRE in my area is being converted to residential. I have read a lot of articles saying this is not profitable, but I guess if it is bought for 50% it can be profitable?
Rent Control is also a likely factor here in big cities. Once in a rent controlled apartment moving is rarely economical after a couple of years.
Zoomers can put their stuff in a U Hal truck and move. Moving a family from
house to house cost thousands, or more, in an interstate move. It doesn’t pay to move. Demand for 1BR, or 2BR apt in the flyover areas is high. Rent jumped fast from a very low base. The RE sector might be subjected to a systemic change that most homeowners and mum & pops landlords don’t recognize. The cost of a house and maintaining a house, even without a 7% mortgage, inhibit buying. Landlords prefer to accumulate existing multi apt units, while building a regional hub.
I don’t know about other parts of the country, but here in NW Montana many long term rentals have been taken off the market and are now “seasonal”, meaning from May to Sep. Depending on the unit, the rent can be up to $500 per day. So, $40-$50 thousand per year. More hassle and expense, to be sure, but no way the home would rent for that amount on an annual basis.
This has created a real problem for lower income people who can’t afford the rent or can’t find a home to rent. And, even if they do, there is a real risk that the home will be sold out from under them when the owner decides to sell, as the market has been crazy high for the past 4 years since Covid. Tremendous influx of people fleeing the cities and bringing significant cash from the sale of their prior homes.
Do they have mobile home parks, where people can rent?
You have to live somewhere, and there’s no danger of rich out-of-towners snapping them up.
I owned a house until last summer when I decided to sell and rent instead. The house was paid off, but the kids were grown up and the house and expenses too big. Property taxes had increased 25% in one year (NJ) with no improvements to $25,000 per year. Add $6,000 insurance, $6,500 landscaping, $7,000 utilities, $3,000 for the pool, $4,000 average annual repairs plus other stuff and I was spending close to $50K per year. Again, with no mortgage. House sold for $1.3M. I rented a nice 4 bedroom, 3.5 bath, 2 car townhouse for $5,000/month and $4,000/year utilities. No real maintenance, no yard work, no snow plowing, nice quiet and convenient neighborhood. Glad I did it. I have friends that ask how I can throw money away on rent. Well, I was throwing it away owning. I have doubts real estate around me will keep rising. I don’t want to be paying the ever increasing home owning costs. 5 or 10 years from now, I hope to move southerly where the weather is better and costs are lower.
(1) You’re still paying for property taxes, insurance, landscaping, and utilities, just on a different property. The expenses didn’t go away, you just have the landlord as a middleman now for most of them. Middleman isn’t free, but might be worth the price if you want simplicity in your lift.
(2) You’re now paying $64K per year instead of $49,500 per year, according to the data you provided. But at least you can earn interest on the $1.3M in cash, whereas your equity was at risk.
(3) You’re implicitly betting on real-estate deflation ahead. You traded in your home-equity (inflation protection), and accepted a risk of having to pay higher rent if inflation continues.
Sure property taxes and landscaping are in the rent but with a townhouse, landscaping costs the owner vary litte. The town I moved to has 1/2 the normal property tax, but that is buried in the rent anyhow. Utilities are 1/4 of the house. Renters insurance is $250/year versus $6,500.
Yes, I am betting that real estate will drop, but I have no intention of buying real estate again in NJ. When I move down south, maybe.
That’s fine unless you have noisy neighbors. I can’t stand shared walls, and simply won’t do it again (until I’m in a nursing home, I suppose. Hopefully I’ll be deaf by then.)
64k/year for a roof over your head?
Welcome to northern NJ. Everything is crazy expensive.
One trend developing in my area is a return to multi-generational housing.
Large homes owned by Boomers would have been sold and downsizing occurring.
This in past freed up housing stock for new family formation.
Now Boomers hold on and subdivide that house into essentially two family mother daughter configurations. Everybody has a roof over their head and Boomer hold title and which operational costs the offspring now contributes towards.
This will restrict willingness for younger workers to relocate but established neighborhoods take on a form of permanence.
Would be expecting some policy advancements offered up soon by Trump administration to alleviate Housing stock shortages.
Powell going to get a grilling over next two days but Fed is powerless at this time to have anything to offer other then some platitudes about how magnificent they are doing.
Dems still think its Jan 6 2021 so they are categorically useless.
Powell going to get a grilling over next two days but Fed is powerless at this time to have anything to offer other then some platitudes about how magnificent they are.
We may get a hint of what is coming from Trump as questions get sent Jay Powells way.
should have edited post better but thought is there.
You should be able to edit for at least a few minutes by clicking on the manage comment spiked wheel. If time has passed send me your edits and I will post them.
Hover over your post to see the edit wheel.
Thanks will give it a try am sort of technologically challenged.
Was it NAR (National Association of Realtors) or was it the WEF (World Economic Fund) that said, “in the future, you will own nothing, and be happy”?
Renting has its place, such as relocating for a job, or to attend a university. If you have the means, and the stability in your life and income to afford to purchase a home, that will always be more desirable for a great number of reasons.
from this premise we can understand, either a larger number of people simply cannot to buy a home, and don’t know how to build a home.
These are structural problems, based on income and job stability as well as a lack of education regarding basic construction techniques and a tremendous overburden of regulation strangling owner construction.
What has been done, can be undone, if the people and the government can operate together towards these common goals. As long as the government regards its people as serfs to be stripped mined of as much income as possible as rapidly as possible, the people will have neither the money or resources, or abilities or option to build or own their own homes.
The outcome will not change, until the conditions causing them change.
Building codes are there for a reason, and new building techniques require some special skills. The reason while housing is unaffordable is central bank financial shenanigans originating with Bernanke’s wealth effect theory. Unaffordability is the consequence of that alone.
The system is broken for a foreseeable future.
There are differences between building codes which require certain materials and techniques, and zoning codes requiring minimum square footage, etc.
some of these codes are remnants of guild protections precluding who can build what, not how.
Don’t forget the corollary: President Musk will own EVERYTHING, and be happy.
If folks that are stuck in rentals is increasing then the existing homeowners may start facing headwinds also.. With a decline in enough qualified home buyers then the home prices in some markets will decline. Lower borrowing costs seem to be the major solution to allow more renters to become qualified buyers.
This whole thing is a backward step in the evolution of the average American. Everyone wants to own a home, and especially in a country that wont so easily take it away for whatever reason. The RE industry is starting to harp on this idea that young people dont want to own. They want to be free!!! Yeah, right. Some MBA thought that tripe up. And the sad fact is there are LOTS of homes. Theyve just been bought up by rich sleazebags who have easy access to free/0% money. Set the interest rates at 4% and you’d see a tsunami of homes hit the market, at reasonable prices.
It’s more complicated than that. I own rentals that I rent out and while I am rich, I’m no sleezebag. There are tons of homes available on the market for dirt cheap all across America but no one wants to live there. Most of the homes are in dying rural towns but even within cities, there are large areas that people avoid living in but there are plenty of homes available.
There is a Youtube channel dedicated to it. Check it out.
https://www.youtube.com/@JoeandNicsRoadTrip
I have two empty homes Im aware of — a condo right next to me that the family doesnt live in, and a house owned by a person living in MY building. The houses are being used as investments/stocks/somewhere to dump money, and most have been financed by 0% money via hedge funds and private equity. If you dont want to be a sleazebag anymore, pay your fair share of taxes that youve been avoiding all your life. 😉
Those homes are “free” they have property taxes, maintenance, insurance, etc. even with 0% financing and even if they are paid off. Unless they generate income, the owner will incur expenses and take losses.
But the $400,000 to buy each was either privately financed (some Im sure) or they were bought by entities that somehow someway got a hold of hundreds of billions of dollars to buy up America. Most of the properties are being rented out, but for rents a tad higher than they would have rented. Goldman Sachs cant give million dollar bonuses selling rubber dog crap from Hong Kong.
That’d be my plutocrat crew.
Enjoyed that channel. Thanks.
There are lots of homes. What I see are buyers who want nothing to do with a fixer upper or, want to live in the high dollar area. They would rather have a fancy apartment or live in a fancy house with other renters. It is beneath them to live in anything needing elbow grease.
I do however believe things will swing back to home ownership. Home prices will stabilize and come down some. The pandemic did enormous damage to housing prices. At one point Berkshire Hathaway was buying up homes in my neighborhood for outrageous prices. It really screwed things up but reality has begun to sink in. I think BH lost on that deal because the homes never sold at those crazy prices.
Berkshire Hathaway owns a lot of trailer parks and trailers as well, they are an equal opportunity slum lord.
What astounds me about renting homes instead of buying is the rental prices on the homes. Here in Florida it’s not uncommon to see homes listing for 5-8K a month rent.
Every time I see those numbers and people renting those places I think how is it that you can’t afford to buy if you can afford to pay 60-96K a year in rent?
its difficult to put a mortgage on a credit card, however monthly expenses like rent can be credit card funded.
Many people aren’t very financially savvy, look at all the lines for Iphones, which essentially do the same things as a 50$ burner phone. What makes the iphone worth 900-1500$ more? Social Status. and the phone can be financed by mortgaging their future.
The people readily accept the yoke of debt, they practically beg to be put in financial bondage.
My parents grew up in the depression, they educated me as to the true nature of debt and bankers. My inheirtance was thin, merely an understanding of the world, but it made me rich in many more ways than a stack of dollars and no understanding would have.
Its a strange world where most people prefer to be blind and ignorant, rather than informed and watching and understanding.
Desktop computers also stared failing a lot sooner than most people would have liked. So, you can pay $1400 for a new desktop every 3 years, and you can pay $1400 for a new I-Phone every 3 years, or if you are really rich, you can do both. Most people aint, and so desktops have disappeared from homes. I-phones became the household computer.
an iphone is a great tracking device, an adequate phone, and a poor computer.
a real computer, for instance a laptop can be purchased off lease on ebay for less than 300$.
I usually pay less than 100$, you just have to know a little bit about computers.
Mine breaks every 3-4 years and my friend charges me $1300 for a new one with everything loaded. My friends also tell me Iphones break just as frequently.
bingo!
That sounds very high. I wouldn’t think snowbirds would pay that much.
Anecdotal story….In 1969, my parents bought their house (built in 1955) for $35,000. It was in a nice, upscale neighborhood in a northern suburb of Miami, about 5 blocks from Biscayne Bay. Our home was 3/2, 1900 sq. ft. Parents sold the house in 2010 for $400K. It was remodeled, and now has sale-pending at $1.9M. Taxes are $29K per year! I have no idea what insurance premiums are, but I’ve heard they are out of sight, assuming coverage will even be written.
And dad made $200 a week.
My dad made a ‘bit more’ than that. He owned the company! LOL. But he was not extravagant. He grew up in a dirt-poor household with 9 kids with his father passing at age of 41. My dad brown-bagged his lunch for over 50 years.
Ok, how about this … my Reggie candy bar went from 25 cents to 40 cents from 1978 to 1980 (always wondered why that happened). Dad and moms house cost 35k (my parents paid 30k) because everything cost less (and everyone was paid less) 50 years ago.
Actually dollars were worth more, back then, so it took fewer dollars or dimes to purchase things, and yes people got paid less, but the money was worth more.
my salary went from 4,500 in early 1970’s to 45,000 in the present, but my lifestyle has remained the same due to no debt and I own my home,car etc.
it is the value of money which has decreased, it is expressed as higher prices, but its the value that is the problem.
BTW by keeping my lifestyle the same. I have managed to acquire a very nice nest egg that keeps the wolf from the door quite well.
I posted about this before. My middle class parents bought a house in Boca Raton between the intracoastal and the beach for about $30K in the late 1960s. At the time it was a middle class area and none of the houses had gates. Now they are all privacy-gated multi million dollar homes.
Interesting. One trend I’m seeing in my area are homes with on suites. They sell lightning fast at top dollar, even if the home or suite is dated. They sell within a week or two.
I wasn’t planning on adding an on suite to a property I’m renovating but I’m starting to lean that way. The home has a long driveway. Close in the current garage and build a new garage in front of the closed in one. The slab is already there so big savings. Plumbing will be the biggest expense but I’ll make it up with the novelty of it.
I was talking a guy in D.C. with properties. He said he wished he owned more. The return to work is bringing renters back to his area. The only real concern is the traffic. It will be awful.
“the number of house renters who spend less than 12 months in a home before moving fell 4.5%”
I’ve never heard of a single family rental that doesn’t require at least a 1 year lease.
I can tell you in my area of CT/MA there is a dire shortage of rentals. Very few apartments to choose from. Rents way up over the last 5 years.
Same goes for houses for sale. Not enough to meet supply.
You can get 3 to 6 month leases on single family homes in Florida.
That’s because of the amount of snowbirds who come south every winter looking for places to ride out the winter.
Just turned back into a renter after about two decades. Took a sizable gain plus equity on my McMansion, and the interest will pay 100% of the rent in our downsized house as we go into retirement. We are thinking of staying at least two years as we look for a permanent retirement place, but to be quite honest we may just stay here for quite a while as we like the new place and location, and like one monthly payment without worrying about property taxes, HOA payments, gardener, replacing the refrigerator or roof, and all the things we took care of in our previous homes.
Understood. It depends on your expected timeframe. If you’ll be moving to a different area within a couple years, that’s great. If not, you’ll face rent increases.
That’s why we bought a single family new construction so we won’t have a lot of expenses for a while. We will have maintenance and we do pay to have our grass cut. It’s cheap as we opted for a small lot.
its okay to mow your own grass, its cheaper than a gym membership and it lets you look for problems like fire ants or other invasive plants and insects.
its also okay to get rid of the lawn and plant something useful and beautiful in its place.
I’m handicapped from being in two serious auto accidents and my husband has limited physical capabilities.