Why New Working Class Rentals Are a Rare Sight

The composition of the U.S. apartment market has shifted measurably over the past decade, according to Yardi Matrix data, with the change most visible within the Renter-by-Necessity housing segment.

Renter-by-Necessity housing still accounts for a large share of the national stock, but its position has steadily eroded, as new supply has concentrated in Lifestyle units. The shift has unfolded gradually, but consistently, across market cycles and geographies.

For this piece, we’ve coopted the two terms used by Yardi Matrix to define the two major components of unsubsidized housing: Renter-by-Necessity and Lifestyle. More detailed methodology is listed below. Here is our analysis of data sourced from the provider.

In 2014, Renter-by-Necessity housing represented more than half of the U.S. multifamily inventory (55.2 percent). By 2025, that share had fallen to 42.6 percent, even as the total number of units increased. Over the same period, Lifestyle units expanded significantly, reshaping the market’s overall composition.

The shift appears to be definitive. Each year, new deliveries added more weight to the Lifestyle segment, steadily reducing the relative share of Renter-by-Necessity housing. This is not a short-term fluctuation, but the cumulative result of development patterns that have persisted for more than a decade. The change reflects not only what has been built, but also what has not been added to the market.

A geographic split in RBN concentration

The national trend masks wide variation in Renter-by-Necessity housing at the metro level, where the stock composition reflects local development patterns and growth trajectories.

In markets in the Midwest such as Detroit (73.5 percent), Columbus (59.3 percent) and Indianapolis (56.7 percent), Renter-by-Necessity housing remained the dominant form of rental housing. These metros have retained a larger base of RBN housing, reflecting slower shifts in the composition of new supply over the past decade. In these markets, the existing stock continues to define overall conditions, and new development has not materially altered the balance.

The picture looks very different in the Sun Belt. In Austin (22.7 percent), Charlotte (23.5 percent) and Raleigh (23.9 percent), Renter-by-Necessity housing accounts for less than one-quarter of total stock, reflecting a decade of strong population growth and development pipelines heavily skewed toward Lifestyle units. Here, new supply has not simply added units, it has reshaped the market’s composition.

Across regions, the pace of change varies significantly. The steepest declines in RBN share have been concentrated in a handful of markets, with decreases greater than 15 percent in share recorded in metros such as the Twin Cities (–19.4 percent in share), Columbus (–17.4 percent) and Denver (–17.4 percent). Similar shifts were evident in high-growth Sun Belt markets, including Austin (–16.6 percent) and Charlotte (–15.4 percent).

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These declines reflect both the scale of new supply added to these markets and its consistent concentration in Lifestyle units.

Coastal metros sit between these extremes. In Los Angeles (47.9 percent) and San Diego (45.0 percent), Renter-by-Necessity housing still represents a substantial share of the market, but both metros have seen gradual declines over time. Even where the segment remains significant, the direction of change is clear.

Across all regions, the same dynamic emerges. Renter-by-Necessity housing is not disappearing, but it is steadily losing share as new supply reshapes the overall composition of the housing stock.

An aging inventory explains the shift

The decline in Renter-by-Necessity housing share is not being driven by widespread removal of units, but by the age profile of the segment.

Renter-by-Necessity housing is disproportionately older, with a large share concentrated in properties more than 30 years old. By contrast, Lifestyle units are heavily weighted toward newer vintages, particularly properties delivered over the past decade.

This imbalance explains the shift. Growth in RBN stock consistently lags new supply, causing its share to decline even as total inventory remains relatively stable.

The segment is aging in place while the broader market continues to expand. Each development cycle introduces new units that fall outside the RBN category, gradually reducing its relative share. Over time, this process compounds, producing a measurable shift in the market’s composition.

New supply continues to bypass RBN

Development patterns provide the clearest explanation for the shift in Renter-by-Necessity housing share.

Over the past decade, Lifestyle units have consistently accounted for the majority of multifamily deliveries, often exceeding three-quarters of annual completions. Renter-by-Necessity housing, by contrast, has remained a small portion of new supply, typically in the single digits.

This imbalance is not limited to completed projects, it is visible at every stage of development.

Construction starts confirm that RBN development has remained limited across cycles. Even during the surge in multifamily construction between 2021 and 2023, most new starts were concentrated in Lifestyle units. RBN activity increased during these years, but remained modest relative to total development.

At the metro level, the pattern becomes even more pronounced.

RBN construction is highly concentrated in a small number of markets, including Dallas (11,874 units), Seattle (10,510 units) and Columbus (7,668 units) over the 2014–2025 period. Even within these metros, development has been uneven, with activity clustered in a few peak years rather than sustained over time.

In Dallas, for example, RBN construction starts surged to 2,829 units in 2022 and 2,148 units in 2023 before moderating. Other metros show similar patterns, with short bursts of activity followed by periods of limited development. In Seattle, starts peaked at 1,361 units in 2022 before falling to 513 units in 2023, while Columbus reached 1,260 units in 2022 and 1,875 units in 2025 after several years of much lower activity. This indicates that Renter-by-Necessity housing is not supported by a consistent pipeline, but instead emerges intermittently, often tied to specific projects or localized conditions.

This uneven pattern also reflects how capital is allocated across segments. Lifestyle development follows a more continuous pipeline, supported by consistent investor demand and scalable project economics. RBN construction, by contrast, is episodic and lacks the same level of continuity.

This dynamic is visible across all stages of development, from starts to deliveries to the current pipeline. RBN is not only a small share of new supply, but also lacks the steady development cadence seen in other segments.

Even relative to its own share of the stock, Renter-by-Necessity housing remains underbuilt. The segment accounts for more than 40 percent of existing inventory, but a much smaller share of new development activity.

As of early 2026, approximately 76.9 percent of the multifamily units under construction are Lifestyle, compared to just 3.5 percent for RBN. Fully affordable housing accounts for a larger share (19.6 percent), but still trails far behind the market-rate pipeline.

Measured against existing stock, the gap is even more pronounced. Units under construction account for 8.69 percent of existing Lifestyle stock compared with just 0.69 percent of existing RBN stock.

This imbalance reflects a longer-term development pattern in which new supply has consistently favored Lifestyle units. Therefore, the pipeline serves as a forward indicator, suggesting that the relative share of Renter-by-Necessity housing will continue to decline absent a shift in development trends.

Demand for Renter-by-Necessity housing persists

Despite limited new supply, demand for Renter-by-Necessity housing has remained steady.

Occupancy rates for RBN properties have historically tracked slightly above Lifestyle levels. In 2025, RBN occupancy stood at 94.2 percent, just below Lifestyle (94.5 percent) and 94.3 percent overall.

Even as occupancy softened across the broader market, the gap between segments narrowed rather than reversed. The data indicate that the issue is not demand-side. RBN units continue to attract renters across cycles.

This stability underscores the role of Renter-by-Necessity housing within the broader market. While demand for higher-rent units can fluctuate with economic conditions, the need for lower-cost rental housing remains relatively consistent.

Rent growth reflects supply constraints

RBN units remained significantly less expensive than Lifestyle properties, with rents roughly 27 percent lower than Lifestyle units and about 15 percent below the national average in 2025.

However, over the past decade, RBN rents have grown at a faster cumulative pace. From 2014 to 2025, RBN rents increased by 60.3 percent, compared to 37.3 percent for Lifestyle units.

With relatively little new supply entering the segment, existing units have absorbed demand, pushing rents upward while remaining below the higher-end product. The result is a segment that remains more affordable, but increasingly constrained.

At the metro level, the affordability picture varies widely. In New York City ($3,162), San Francisco ($2,601) and Boston ($2,378), RBN rents now exceed $2,300. In contrast, Dallas ($1,255), Phoenix ($1,245) and Columbus ($1,235) remain below the national average.

This variation highlights how unevenly affordability is defined across markets, even within the same segment.

Methodology: Data for this analysis are sourced from Yardi Matrix and cover U.S. multifamily properties from 2014 through early 2026, where available. Stock, deliveries, construction starts and pipeline figures are aggregated at the national level and across a consistent set of selected metros. Construction starts by metro are ranked based on cumulative RBN units started between 2014 and 2025. All percentage comparisons reflect shares within each segment unless otherwise noted.

Note that the “Lifestyle” segment features multifamily assets in the A+/A/A-/B+ Property Context® Rating range, as defined on the Yardi Matrix platform, while Renter-by-Necessity features assets in the B/B-/C+/C/C-/D range.