4 Markets Where Renting Has Outpaced Homeownership
Renting is on the rise. A Harvard University Joint Center for Housing Studies report said 1.4 million new renter households were formed in 2015, pushing the percentage of U.S. households that rent to 36.4%. That is the highest level since the 1960s, and the trend is so pervasive that even wealthy Americans increasingly prefer home and apartment rentals to homeownership.
Despite its growing popularity, renting still is not dominant in most U.S. cities. According to a recent Abodo study, there are over 400 urban areas in the U.S. with populations exceeding 100,000, but only 21 contain at least 50% renters.
From major cities like New York City and San Francisco to smaller college towns, here are four key markets where renting has outpaced homeownership in the U.S.
1. College Station, Texas
Percent Renters: 59.1%
This unassuming Texas city has the highest percentage of renters in the country. The city hosts the main campus of Texas A&M University, which enrolled more than 58,000 students in 2015. Almost 64% of renters in this town live within non-family households, which include people who live alone or with non-relatives. Developers recently took interest in the city to capitalize on its sizable life science and retirement sectors.
2. Los Angeles
Percent Renters: 53.9%
JLL Capital Markets vice president Patrick Inglis said LA's low homeownership rate is largely due to home price growth outpacing wage growth. This trend of unaffordable housing is only exacerbating the problem. Demand for rentals pushes rents higher, making it increasingly less likely renters will be able to save money to purchase a home; 60% of renters in the city are family households.
3. San Francisco
Percent Renters: 50.9%
It is not surprising that more people are inclined to rent than own in San Francisco. The monthly cost for homeowners with mortgages is the highest in the country, and often costs are at least a $1k more a month than renting. Average rents fell in the city from February to March in response to overbuilding.
4. New York City
Percent Renters: 50.7%
Not unlike San Francisco, homeownership often costs New Yorkers $1,300 or more a month than the city's median rent price. Total NYC rents are down 10% from a year ago as deals slow in today's tight lending environment, and for the first time in four years, Manhattan apartment rents are falling in every category.