Renting trends have taken a new turn during the last decade with more and more people shifting from owning a home to renting one. This is happening due to the constant rise in house prices, tight credit rules or possibly simply out of sheer convenience. And it’s not just the number of renters that has changed, but also the profile of the typical renter.
Using U.S Census data, our colleagues at RENTCafé looked at how the renter households have changed since 2009, nationally and locally.
More seniors prefer renting to buying
Nationally, from 2009 until 2015, the biggest changes in the renting population by age group came from the over 55 years of age renter segment which increased by 28%. Also, by education and family type, the highest increases were in the number of renters with a bachelor degree or higher (up by 23%) and in families with no minor children (up by 21%). When trying to come up with a profile of this new type of renter, a certain group comes to mind: empty-nest Baby-Boomers.
Renters over the age of 55 are responsible for the largest net increases nationwide, with 2.5 million senior households shifting to renting between 2009 and 2015. Other age groups such as those aged 35-54 have increased by 1.95 million while those younger than 34 increased by just 0.5 million. These changes shift the focus to a new area of the rental market of interest for builders, developers and property managers.
Location wise, more and more new renters are favoring the suburbs. The analysis shows that the numbers have increased considerably more in suburban areas than in urban areas among older renters (by 39% in the suburbs and by 21% in cities), highly educated renters (by 26% in the suburbs and by 20% in cities) and renting families with no children (by 33% in suburbs and by 16% in cities).
Los Angeles metro witnesses the most striking demographic change
Mirroring the national trend, the renting population in California is following the same pattern. In order to get a deeper insight into these changes, analysts at RENTCafé analyzed the data in California’s largest metros, Los Angeles, San Francisco, Riverside and San Diego, in terms of age, education and family type.
Changes in Renters by Age Group
Baby-Boomers are the fastest growing renter segment across all four metros, but especially in Riverside where those aged 55 and over reached a 63% increase (gaining 40,000 new renter households) in the time period analyzed. This is incredibly high compared to the second highest increase of 33% witnessed by the same age group in San Diego. Senior renters in Los Angeles are up by 30% and in San Francisco by 27%.
More interestingly, Los Angeles added 134,000 new renter households aged 55 and over between 2009 and 2015, more than any other U.S. metro, while at the same time losing almost 26,000 renter households under 34.
Those aged between 35 and 54, although representing the majority of renters, have posted weaker increases, by 40% in Riverside metro, and by only 10% in Los Angeles metro.
Changes in Renters by Education
Among people with a high school diploma or less, those with some college education and those holding a bachelor degree or higher, the latter renter category stands out with the highest increase between 2010 and 2015, across all four California metros. Moreover, highly educated renters in California mostly prefer Riverside, followed by San Diego and San Francisco. Between 2010 and 2015, this group increased by 35% in Riverside, 22% in San Diego, 18% in San Francisco and 14% in Los Angeles. Riverside gained an additional 16,000 renter households with a bachelor degree or higher.
Moving forward, it’s important to point out that the majority of renters in these 4 metros is represented by different education groups. Renters with a bachelor degree or higher make up the majority in San Francisco (44% in 2015), followed by those with a high school diploma or less in Los Angeles and Riverside (41%) and those holding a college diploma in San Diego (35%).
Changes in Renters by Family Type
More and more families without children prefer renting. This has been noticed across all four metros, with higher increases in Riverside (47%), followed by San Diego (28%) and San Francisco (25%). Although witnessing the lowest increase of 33%, the rental market in Los Angeles gained 108,000 more renter households in this category, the largest net gain of all 4 metros.
Renting families with children have also increased significantly between 2009 and 2015, by 37% in Riverside, 27% in San Francisco, 19% in San Diego and only 4% in Los Angeles.
Renting in the suburbs is more popular
The study also confirms what many developers are already aware of: that suburban markets are in demand. In all four Californian metros, the number of seniors renting in the suburbs increased faster than those renting in the cities. The highest increase in senior suburban renters, aged between 55 and 74, was in Riverside, of 83% (versus only 54% in the urban area). The senior renting population increased by 41% in suburban Los Angeles and San Francisco, and by 42% in suburban San Diego.
Looking at education level, the most striking increase was noticed among suburban renters with a bachelor degree and higher. They increased by 48% in Riverside, 27% in San Diego, 21% in San Francisco and 14% in Los Angeles. By family type, suburban families without children have increased the most, with 60% in Riverside, 29% in San Diego, 28% in San Francisco, and 27% in Los Angeles.
The rental market is expected to start focusing more on catering to this new renter demographic. As an increasing number of people of different ages, education level and family status shift to multi-family housing, the industry is gearing up to meet their needs.