Renter Households to Reach More Than 50 Million By 2030
By John Beacham, Chief Investment Officer, B2R Finance
A recent report from the Urban Institute titled “Headship and Homeownership: What does the future hold?” highlighted the expected surge in renter households, from 40.7 million in 2010 to 47.9 million in 2020 and 53.7 million in 2030.
The study examined household formation and attainment of owner-occupied properties —nationally and by demographic groups over the past quarter-century—and projected future trends. The study also noted that while the absolute number of owner-occupied households will grow because of net new household formation, the absolute number of renters will grow much faster.
The study put forth competing scenarios regarding owner-occupied housing purchases and rental growth:
In one scenario of slow growth in housing purchases, renters would increase more rapidly than owners, from 40.7 million in 2010 to nearly 48 million in 2020 and 54.1 million in 2030. The net increase in renters during this decade would amount to 7.2 million, with another 6.2 million in the 2020s.
In a scenario of faster growth in housing purchases, the projections for renter growth are smaller but still robust. Renter growth in the 2010s, at 7.1 million, would still be nearly as strong as in the slow growth housing purchase scenario, which put it at 7.2 million, but would decline to 5.4 million owners in the 2020s.
THE TREND TOWARD RENTING
The rise in renters in the United States began to grow rapidly as early as 2000. Between 1990 and 2000, only 28 percent of new households formed were renters. Renter growth increased rapidly in the following decade with 45 percent of new households being renters between 2000 and 2010.
The Urban Institute expects the trend toward renting to continue. From 2010 to 2020, 11.6 million in net new households are projected to form, with 62 percent (7.2 million) being renters. For the 10.4 million net new households expected to form between 2020 and 2030, 56 percent (5.8 million) will be renters.