Housing for: Renters – National League of Cities

Since 2020, the proportion of households renting has been increasing rapidly. Renters now make up more than a third of all American households.

Our tenants represent a strong and diverse group of people from all demographic backgrounds:

• On average, renters are younger than homeowners, with the average age being 42 years versus 52 years, respectively.
• Renter households tend to have fewer people and are more likely to be composed of unrelated individuals—single individuals, single-parent households, and non-family households make up nearly two-thirds of renter households.
• The share of older renters is growing rapidly. Between 2009 and 2019, the number of renter households headed by someone 65 and older rose 43 percent.
• People of color are more likely to be renters. The percentage of renter households headed by a person of color (48 percent) is nearly twice the percentage of homeowners (25 percent).

How is the rental market changing?

In almost every metropolitan area, average rents have been rising over the past decade, especially in already high-income urban areas. While there are countless reasons for rising rents, the prices of materials, labor and land play a major role in driving up costs at the market level. Material and labor costs doubled between 2001 and 2019, and continue to rise.

Likewise, land prices rose 16 percent year over year in the second quarter of 2021. After that, the average asking rent for newly completed apartments rose by $111 between 2020 and 2021 ($1,604 per month vs. $1,715 per month). The number of low-cost units has decreased significantly; Units costing less than $600 per month decreased by $3.9 million between 2011 and 2019. In 2023, the hourly wage a person working full-time would need to earn to afford a one-bedroom apartment is $23.67 — more than three times the federal minimum wage.

Housing affordability, for all renters across the country, is an increasingly prominent topic as rising costs begin to have serious impacts.

How does this impact Black, Indigenous and People of Color renters?

People of color are more likely to be renters, reflecting historical disparities in access to homeownership opportunities due to discriminatory lending, legal, and real estate practices.

Black families are overrepresented in low-income groups. Black households make up 12% of all households but 27% of renters who earn less than $15,000 per year. Black households are also overrepresented in the rental market overall, with 58 percent of Black households renting their homes in 2019 compared to 28 percent of white households. In comparison, 52% of Hispanic households, 43% of Alaska Indian/Native households, and 39% of Asian households rented their homes.

The geographic concentration of rental housing also perpetuates racial and socioeconomic segregation by concentrating poverty. Regardless of income, nearly half of Black, Native American, and Latino renter households lived in neighborhoods with at least 20 percent poverty in 2019. This spatial concentration of poverty has measurable impacts on the socioeconomic conditions of renter households of color. In the 60’s^y Percentage, a full-time white worker can afford to rent a two-bedroom house at fair market rent; Relatively speaking, a full-time black or Latino worker at age 60^y As for the percentage, respectively, you cannot even rent a one-bedroom house.

Where do the tenants live?

Across the country, renter households are more likely than homeowners to live in central cities in metro areas where more rental housing is available. The Northeast region of the country has the largest share of rental units in buildings with at least 20 apartments (32 percent), as well as a higher concentration of multifamily buildings with two to four units. In terms of affordability, the Midwest accounted for the largest share of low-rent housing in 2019, with 35% of units renting for less than $600 per month. On the housing wage scale, which is the hourly wage a person working full-time needs to earn in order to afford a two-bedroom apartment, California ranked as the most expensive state in the country at $42.25. On the same scale, Arkansas was ranked as the least expensive at $16.25.

How has the rental housing stock changed over time?

In the past decade, construction of large multifamily buildings has increased, accounting for most of the recent growth in rental inventory. Between 2014 and 2019, growth in total rental housing stock was driven almost entirely by a net addition of 1.7 million in buildings with 20 or more units. This growth in multifamily production is mostly targeting the upper end of the rental market; In 2022, the average asking rent for new units reached $1,805 — an increase of 7 percent from the average in 2015. As the nation’s rental inventory continues to move toward larger multifamily projects, the supply of small rental buildings is expanding. decline. Between 2014 and 2019, the number of single-family rentals decreased by 770,000 units, and the number of multifamily buildings with two to four units decreased by 270,000 units.

Existing housing stock is also aging, with 3.3 million occupied rental units considered at least somewhat inadequate in 2019. Older rental units are more likely to have structural deficiencies and are considered inadequate; 11 percent of rental stock built before 1940 is considered insufficient. Despite rapid growth in building new rental stock, aging existing stock combined with astronomical demand for new housing poses a challenge for cities, towns and villages across the country to re-evaluate local housing conditions and availability.

The rental market is witnessing shifts in how housing is owned and managed. Institutional investment is playing an increasingly important role in the ownership and management of rental housing in the country. Since the COVID-19 pandemic, institutional investors have been purchasing more and more existing single-family homes. Specifically, Texas and other Sun Belt states have seen a significant increase in single-family rental homes owned by institutional investors. One particularly popular form of housing backed by institutional investors is build-to-rent housing, which involves single-family homes built for the purpose of renting to tenants. Texas is also a major market for build-to-rent housing and contains many rapidly growing urban areas that have been prime for new build-to-rent subdivisions.