Growth in rental households began in 2005 as homeownership began to slow, and rentership rates have been on an upward trend since. The Millennial generation has garnered the most attention related to the evolving composition of households. However, when looking into the age cohorts that are adding to this increase in rentership, an interesting story unfolds.
Over the past decade, rentership across the nation has grown to levels not seen since the 1980s. Since hitting a low of just over 31% in 2004, rentership has been on an upward trend, accounting for 36.3% of householders in 2015. That was the first year that rentership among householders exceeded 36% since 1994.
Looking at growth in renter households, 2005 marked the first year that the number of renter households grew faster than the number of owner households. Throughout the housing crisis, rentership spiked as homeownership dipped. Since 2010, homeowner households have stagnated while renter households have boomed.
So who are all these new renters?
Millennials are called often “the renter generation,” and with a population larger than the Baby Boomers, they provide an easy way to explain away the change in the nation’s household mix. However, Millennials comprise a smaller share of renter households today than the under 35 cohort has in the past two decades. The largest increase in the share of U.S. renter households is the 50- to 69-year-old cohort, the Baby Boomer generation.
The recent boom in rentership in the 50-to-69 age cohort has led to a 9 percentage point increase in the share of renter households nationally over the past two decades. In 2015, the rentership rate in the 50- to 69-year-old cohort hit 24.7%, four percentage points above historic norms. In turn, that age group made up 24.8% of the U.S. renter households in 2015.
Meanwhile, the under 35 cohort made up 38.5% of renter households in 2015. That’s still the largest share among age groups, but it’s down significantly from the mid- to upper-40% range two decades ago. The rate dropped even as the percentage of Millennial renter households increased to 65.0%, the highest rate for the under 35 cohort since the 1980s.
Interestingly, housing situations among the 35- to 49-year-old cohort have also changed. That group, currently representative of Generation X, saw a 9.8 percentage point increase in its rentership rate since the recent trough in 2004. Still, the 35-to-49 segment made up only 27.3% of all renter households in 2015, down from the recent peak of 31.1% in 1996.