More US households are headed by renters than at any point during the last five decades. For most, it’s not their preference.
That’s according to a Pew Research Center analysis of data from the Census Bureau.
It found that the share of households headed by homeowners stayed relatively flat from 2006, a time when the housing market was collapsing, to 2016. However, in the same period, the share of households headed by renters grew from 31.2% to 36.6%, the highest level since 1965.
The demand for homes available for rent and sale has outstripped supply. Post-recession, this has lifted house prices at a faster rate than wages.
Nearly two-thirds of Americans agree that housing has become less affordable since 2012, according to a recent survey released by Trulia. Further, 41% of renters who were involved in choosing where they lived said their top regret was choosing to rent instead of buy.
This shows that more people wished their monthly rent payments were going towards a mortgage that would eventually secure full homeownership.
Additionally, from Pew:
“In a 2016 Pew Research Center survey, 72% of renters said they would like to buy a house at some point. About two-thirds of renters in the same survey (65%) said they currently rent as a result of circumstances, compared with 32% who said they rent as a matter of choice.
“When asked about the specific reasons why they rent, a majority of renters, especially nonwhites, cited financial reasons.”
Much has been made of millennial homeownership, as a bigger share of the 18-34 age group chooses to rent instead of buy homes.
Pew’s analysis found that people under 35 were the most likely of all age groups to rent. Last year, 65% of households headed by millennials were rentals, versus 57% in 2016.
Affordability is a big constraint, worsened for this demographic by the record level of student debt. Moreover, millennials are the most likely age group to be living with their parents or in entry-level jobs with lower salaries.
The rent-versus-buy divide was also evident along racial lines. Pew found that black and Hispanic households were roughly twice as likely as white households to rent.
In households headed by college graduates, there was a greater chance that the property was purchased and not rented, Pew said.