Why Renters Move

Among the 13 million renter-occupied housing units in which householders had moved in the past year, just over half cited one of these five factors as the main reason for leaving their previous residence...

1. To establish own household (11.7%)
2. New job or job transfer (11.6%)
3. To be closer to work (11.6%)
4. Needed larger house or apartment (8.5%)
5. Wanted better home (6.6%)

Source: Census Bureau, 2013 American Housing Survey

From Owning to Renting, 2012-13

Among the 16 million Americans who moved between 2012 and 2013, this many...

Owners became renters: 3,009,000
Renters became owners: 1,871,000

The homeownership status of the remaining 11 million movers was unchanged when they moved (owners continued to be owners, and renters continued to be renters).

Source: Census Bureau, 2013 American Housing Survey

Why Renters Aren't Buying

Renters aren't becoming homeowners like they once did. Is that because they don't want to own a home or because they can't afford to buy? To determine the answer, the Federal Reserve Bank of New York added a series of questions on its Survey of Consumer Expectations, fielded in February. Were renters planning on moving in the next three years? Among those who planned to move, would they rent or buy their next home? If they did not plan to buy, why not?

It turns out most renters who plan to move and rent rather than buy just don't have the money to become homeowners. The 56 percent majority of these potential homebuyers say they don't have enough money saved or they have too much debt to buy a home.

Source: Federal Reserve Bank of New York, Liberty Street Economics, Why Aren't More Renters Becoming Homeowners?

Appliances and Electronic Goods Owned by Renters

Percentage of the nation's renters who have...

Television: 97%
Cell phone: 87%
Air conditioning: 84%
Computer: 69%
Clothes washer: 63%
Dishwasher: 52%
Landline phone: 51%

Source: Census Bureau, Well-Being

Homeowner Mobility Rises

For the first time since the Great Recession, the mobility rate of homeowners increased, according to the latest data from the Census Bureau. Between March 2012 and March 2013, an estimated 5.2 percent of people who live in owner-occuped homes moved, up from the record low of 4.7 percent in 2011-12. The number of homeowners who moved grew by 759,000 between 2011-12 and 2012-13. Although the mobility rate of homeowners is rising, it remains well below the 8 to 9 percent that was typical in the 1980s and 1990s.

Renters accounted for the 71 percent majority of movers between March 2012 and March 2013. In contrast to the rise in the homeowner mobility rate, the renter mobility rate fell to 24.9 percent in 2012-13, down from the 26.7 percent of 2011-12. Before the Great Recession, the renter mobility rate typically exceeded 30 percent.

Mobility rate by housing tenure, 2012-13
In owner-occupied housing: 5.2%
In renter-occupied housing: 24.9%

Source: Census Bureau, Geographical Mobility: 2012 to 2013

The Future of the Rental Market

The inventory of rental housing is expanding, according to an annual status report on the nation's housing market, but not because developers are jumping on the bandwagon. New construction of rental units remains well below the annual averages of the past two decades.

Rental inventory is expanding because single-family homes are being converted from owner- to renter-occupied, according to The State of the Nation's Housing 2013. Between 2009 and 2011, this type of conversion added more than 1 million single-family homes to the rental stock. "Small investors and local property owners continue to own the vast majority of the nearly 14 million single-family rentals nationwide," notes the report. "But since 2011, large investment pools have acquired single-family homes on an unprecedented scale with the intention of managing the properties as rentals."

The outsized growth of the rental market over the past few years won't last forever, and the report describes a possible future scenario: "As the homeownership market recovers, renter household growth will very likely slow and rental markets will have to adjust accordingly. Since much of the increased demand for rental housing has been satisfied by the expanded supply of single-family rentals, future market adjustments may come from a return of these units to owner-occupancy."

Source: Joint Center for Housing Studies of Harvard University, The State of the Nation's Housing 2013

Many Renters Have No Car

Percentage of households without a vehicle by homeownership status...
Total: 9%
Owners: 3%
Renters: 20%

Source: Census Bureau, 2012 American Community Survey

Rental Vacancy Rates by Metro

Among the nation's 75 largest metropolitan areas, rental vacancy rates are highest in Orlando, Florida. In 2012, 18.5 percent of rental units in Orlando were vacant—more than twice the 8.6 percent rate for all metro areas. Three other metros had vacancy rates above 15 percent in 2012: Richmond, Virginia; Dayton, Ohio; and New Orleans.

Source: Census Bureau, Housing Vacancy Survey, Annual Statistics: 2012

Characteristics of New Rental Units

Studies show that many homeowners would consider renting in the future. The nation's developers are responding with skepticism. Judging from the characteristics of the 155,000 new rental units completed in 2012, builders are scaling back on amenities...

• Only 58 percent had two or more bedrooms, down from 63 percent in 2011 
• Only 46 percent had two or more complete bathrooms, down from 51 percent in 2011
• Units were a median 1,081 square feet in size, down from 1,117 square feet in 2011

Source: Census Bureau, Characteristics of Units in New Multifamily Buildings Completed

Rental Vacancy Rates by Metropolitan Area

Nationally, the rental vacancy rate was 7.4 percent in 2011. Among all metropolitan areas, the lowest rental vacancy rate (0.0 percent!) was in Bismarck, North Dakota. Among the top 50 metropolitan areas, the vacancy rate was lowest in San Jose (2.7 percent). At the other end of the scale, these ten large metros had double-digit rental vacancy rates...

Atlanta-Sandy Springs-Marietta, GA: 10.8%
Cincinnati-Middletown, OH-KY-IN: 11.3%
Houston-Sugar Land-Baytown, TX: 11.6%
Jacksonville, FL: 10.1%
Las Vegas-Paradise, NV: 12.6%
Memphis, TN-MS-AR: 10.7%
Orlando-Kissimmee, FL: 11.7%
Phoenix-Mesa-Scottsdale, AZ: 10.1%
Richmond, VA: 13.2%
Tampa-St. Petersburg-Clearwater, FL: 11.2%

Source: Census Bureau, Rental Housing Market Condition Measures: A Comparison of U.S. Metropolitan Areas from 2009 to 2011

Renting and the American Dream

Sixty-one percent of the American public thinks renters can be just as successful as homeowners at achieving the American Dream, according to a MacArthur Foundation survey. The survey's findings document the growing appeal of renting—despite the fact that most renters still want to become homeowners.

The 54 percent majority of the public says renting has become more appealing over the past few decades. It has become so appealing, in fact, that 45 percent of current homeowners would consider renting in the future. Those most likely to consider renting are young (53% of homeowners aged 18 to 34), highly educated (53% of homeowners with a postgraduate education) and affluent (51% of homeowners with a household income of $75,000 or more).

Source: MacArthur Foundation, MacArthur Housing Matters Survey

Rent Payments

The nation's 38 million renters pay a median of $871 per month in rent. Here is the distribution of renters by how much they pay...

Less than $500: 13.7%
$500 to $750: 23.8%
$750 to $999: 24.3%
$1,000 to $1,499: 24.8%
$1,500 or more: 13.4%

Source: Census Bureau, 2011 American Community Survey

What Renters Want: Location, Location, Location

Among renters who moved between 2010 and 2011, the single most important reason for choosing their new neighborhood was its convenience to their job. This factor was named as the most important reason for choosing a neighborhood by 2 million renters who moved.

Source: Census Bureau, 2011 American Housing Survey

Homeowner Mobility Lowest Ever

The overall mobility rate climbed slightly in 2011-12, but the mobility rate of the nation's homeowners sunk deeper into record-low territory. Between March 2011 and March 2012, only 4.739 percent of the nation's homeowners moved, slightly less than the 4.741 percent of 2010-11. While this decline is not statistically significant, it indicates continued trouble in the housing market. The mobility rate of homeowners peaked at 9.5 percent in the late 1980s.

The number of homeowners who moved in 2011-12 fell to a new record low of 9,701,000, slightly less than the 9,724,000 homeowners who moved in 2010-11. The number of homeowners who moved peaked at more than 17 million in 1999-2000.

In contrast to the moribund mobility rate of homeowners, the mobility of renters climbed to 26.7 percent in 2011-12, up from 26.2 percent in 2010-11. The number of renters who moved climbed by 1.4 million to 26,787,000. This is the largest number of renters who moved since 1998-99 and signals an improving economy but not necessarily an improving housing market.

Source: Census Bureau, Geographic Mobility: 2011 to 2012

From Owning to Renting

Among the 16 million Americans who moved in the past year, this many...

Owners became renters: 3,051,000
Renters became owners: 1,695,000

The homeownership status of the remaining 11 million movers did not change when they moved (owners continued to be owners, and renters continued to be renters).

Source: Census Bureau, 2011 American Housing Survey

Households with Stairs

Stairs can be found in nearly half of American homes. According to the 2011 American Housing Survey, 54 million households have inside stairs--or 47 percent of the total. Owner-occupied houses are much more likely to have stairs (57 percent) than renter-occupied homes (26 percent). In households headed by people aged 65 or older, 45 percent have stairs.

The presence of stairs in homes varies greatly by region. In the Northeast and Midwest, from 65 to 66 percent of houses have indoor stairs. In the South and West, only 34 to 35 percent of houses have stairs.

Source: Census Bureau, 2011 American Housing Survey

Households with Smokers

It is a well-known public health fact that 21 percent of Americans aged 18 or older smoke cigarettes. But here's a different way to look at the prevalence of smoking: what percentage of households include smokers?

According to the 2011 American Housing Survey, only 12 percent of the nation's households include smokers. But, not surprisingly, the percentage varies greatly by household characteristic. Sixteen percent of renter-occupied households include smokers compared with 10 percent of owner-occupied households. Among renter-occupied mobile homes, 29 percent have smokers--the highest percentage found in the survey.

By region, households with smokers are most common in the Midwest (15 percent) and least common in the West (7 percent). In the suburbs of metropolitan areas, 10 percent of households have smokers. The figure is a higher 13 percent in central cities and an even higher 15 percent in nonmetropolitan areas. Among households in poverty, 20 percent have smokers.

Source: Census Bureau, 2011 American Housing Survey

Homeowners and Renters: 25 Years of Spending

How has the spending of homeowners and renters changed over the past 25 years? A comparison of 2010 and 1986 Consumer Expenditure Survey data shows that, on the surface at least, the spending of homeowners and renters is remarkably unchanged.

In 2010, households headed by homeowners spent an average of $55,780, slightly less than the $56,050 spent by homeowners in 1986, after adjusting for inflation. The spending of households headed by renters was also about the same in both years--$33,460 in 2010, down slightly from $33,520 in 1986.

Changes in spending emerge in the details, however. Both homeowners and renters spent much more on  health insurance and much less on transportation in 2010 versus 1986. Both spent more on housing and less on food away from home. The only major category in which homeowners and renters have diverged in their spending is entertainment. Homeowners spent 11 percent more on entertainment in 2010 than in 1986, after adjusting for inflation. Renters spent 6 percent less.

Source: Bureau of Labor Statistics, A Comparison of 25 Years of Consumer Expenditures by Homeowners and Renters

Looking for Clues in the ACS

Last week the Census Bureau released 2011 American Community Survey data. The data dump includes tables comparing the social and economic characteristics of the U.S. before, during, and after the Great Recession--from 2007 through 2011. Some of the statistically significant changes provide clues about the direction of the housing market and the ongoing struggles of the American people...

• The percentage of households without a vehicle has climbed steadily, growing from 8.7 percent in 2007 to 9.3 percent in 2011.
• The percentage of owner-occupied housing units with a mortgage has fallen by 2 percentage points--from 68.4 percent in 2007 to 66.4 percent in 2011.
• For homeowners with a mortgage, monthly owner costs have fallen from $1,725 in 2007 (in 2011 dollars) to $1,486 in 2011--a 14 percent decline.
• Although the number of renters has grown, median monthly rent fell from $926 in 2007 (in 2011 dollars) to $871 in 2011--a 6 percent decline.
• Although median rent has been falling, the share of renters who devote 35 percent or more of their household income to rent grew from 40 to 44 percent between 2007 and 2011.

Source: Census Bureau, American Community Survey

From Owning to Renting among Older Americans

Homeownership is highest among older Americans, with a peak rate of 81 percent for householders aged 65. The rate falls with age to 54 percent among householders aged 95. Is the decline in homeownership a choice older people make or a response to reduced circumstances? This question is examined in a new report by the Employee Benefit Research Institute, which analyzes data from the University of Michigan's Health and Retirement Study--a biennial survey that tracks the socioeconomic status of people aged 50 or older.

The EBRI analysis finds three factors to be most important in determining who transitions from owning to renting: a loss of income, the death of a spouse, and nursing home entry. Among householders aged 50 or older who had transitioned from owning to renting, 41.9 percent had experienced the death of a spouse--making widowhood the number one reason for housing change. Second was a decline in income (30.5 percent). Third, some homeowners who became renters did so after the householder or spouse entered a nursing home (10.9 percent).

Source: Employee Benefit Research Institute, Own-to-Rent Transitions and Changes in Housing Equity for Older Americans