According to data from the PEW Research Center, from 2006 to 2016 the number of households renting their homes in the United States climbed from 21.3 million to 43.3 million households. In just ten years, the number of renters more than doubled, and it is continuing to rise. So what are some of the underlying causes of this trend? We dove into three possible explanations—Student Debt Overhang, Tight Mortgage Credit, and Shift in Buy vs. Rent Attitude—and analyzed them in greater detail.
Student Debt Overhang
- Similar to the trend in rising renters, from 2006 to 2016 the percentage of U.S. households with student debt doubled from 22.4 percent to 44.8 percent. Bloomberg recently highlighted the impact of student debt on the economy and stated that the average household must save for six and a half years in order to cover a 20 percent down payment for a house.
Tight Mortgage Credit
- It is increasingly challenging for people to qualify for a mortgage loan. In fact, MarketWatch reported that tight lending meant that 1.1 million mortgages that would have been made in 2001 wouldn’t qualify in 2015.
Shift in Buy vs. Rent Attitude
- In addition to financial restrictions, renting is becoming increasingly appealing, particularly to baby boomers and Millennials, as it offers mobility and convenience. A 2017 Profile of Today’s Renters published by Freddie Mac reports that only 41% of renters intend to purchase a home, the lowest percentage ever reported.
For landlords thinking of growing their rental property portfolios, the future is looking increasingly bright for the rental market. Plus, now is a great time to purchase properties and take advantage of tax benefits.
For additional insights on the rental market, see our blog category “Rental Market Research.”