The Unstoppable Demand for Rentals
Homeowners are in the minority in a rising number of locations.
Renting now reigns supreme in 169 cities, a new analysis from Point2Homes reports.
As of 2024, more households were renting in those markets than owned homes. In several places, the so-called “rentership rate” surpassed 70 percent, the rental platform found. And the “most striking” renter shares were in smaller markets, not major urban hubs.
The small markets with the greatest growth are generally close to urban cores. Cases in point are New Jersey’s Union City and Newark. Both are part of the New York City metropolitan area where high housing costs push renters farther out. Now, 82 percent of the households in Union City are renters, as are 76.5 percent of households in Newark.
Much of the demand for rentals is coming from people from out of town, according to a Realtor.com report. Among the largest metro areas, 20 have gone from being dominated by local renters to now being influenced by out-of-market demand, the home listing site says. Not one market went the other way.
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Topping the list are Detroit, with a 24 point-swing; Philadelphia with a 23-point shift, and Sacramento, with a 19-point switch.
Meanwhile, Point2 reports that the list of cities where renters now outnumber owners includes such “heavyweights” as New York City, Los Angeles and Houston, each of which has added more than 160,000 renter-occupied properties since the year 2000.
In the last 25 years, 43 cities have shifted to renter-majority status, which just 18 have shifted from renter to owner majority, the report says.
Overall, nearly 10.5 million new renter households have been formed since 2000. According to Census Bureau data, the national rentership rose from 33 percent 25 years ago to 34.7 percent as of last year.
“The housing crash of the late 2000s, followed by a decade of uneven recovery and the disruptions of the pandemic, reshaped the way Americans live and think about home,” the rental platform reports. “Gradually, the path from renting to owning has become less predictable, and for many, less accessible.”
Tracing the growth curve
Just three states—Texas, California and Florida—have accounted for more than a third of the overall rental growth, adding 3.8 million new renter households since 2000. The growth was driven largely by Millennials, who delayed buying, along with changing lifestyle preferences, have kept demand for rentals high, Point2 reports.
Rentals began to take on new importance when the housing bubble burst in 2007. The aftermath “reshaped the housing landscape” as the national homeownership rate plunged and continued to fall, reaching a 50-year low, the report says.
At the same time, demand for rental housing surged and turned “renting from a temporary fallback into a mainstream and increasingly common way of life.”
Today, there are 10.4 million more renter households, an increase of 29.3 percent from 2000. That compares to just a 24 percent increase in owner households. In numerical terms, there are now 46.1 million renter households—up from 35.6 a quarter of a century ago.
