Owning a home with plenty of rooms and a spacious yard is the ultimate dream for many families. However, the rising prices of real estate have pushed households to rent apartments and condo units instead. There’s nothing wrong with living in rented homes, but it might be prudent to investigate if renting is really the more economical choice.
To help us see which is the wiser option – to purchase a home or rent an apartment, let’s check out some rental statistics and rental trends listed below.
Top Rental Housing Statistics ( Editor’s Choice)
- The national median rental rates for unfurnished apartments increased by almost 50% from 2008 to 2018
- US renters paid $4.5 trillion in rent in the last ten years
- The median rent takes up 29.1% of the average household income
- Almost half of the renters in 2019 were aged below 30 years old
- There are over 43 million renters in the US, and almost half of them lost their jobs to the pandemic
- The rental industry provides jobs for over 850,000 people
- 40% of renters are at risk of eviction
- 78% of renters who moved from one property to another experienced rent hike
Rental Price Trends
Rental rates have been fluctuating in the last couple of years. This fluctuation could be advantageous or disadvantageous to renters. For example, renters can benefit from the fluctuation when they are fortunate to lease properties at a time when the rates are at their lowest. Conversely, the fluctuation could be a source of hardship if rates are too high.
Here are some of the rental statistics and trends where we can see how renters fared the past couple of years.
1. The national median rental rates for unfurnished apartments increased by almost 50% from 2008 to 2018.
Renting is often viewed as a more economical substitute for households compared to purchasing homes. However, apartments have seen a consistent increase in rental rates in recent years. Even rates for unfurnished apartments have increased by 50% from 2008 to 2018.
These soaring rates have been a source of outcry for many renters and households. It appears that renting in certain states and cities is becoming more and more expensive for many households.
2. 62% of renters are anxious they won’t be able to make regular rent payments.
The coronavirus has dampened the general outlook of the entire nation. The vast majority are wondering how they would be able to sustain even the most basic living expenses such as food and shelter amidst unemployment. As many as 62% of renters are worried about the immediate future and that they won’t be able to pay rent regularly.
3. 20% of renters had missed or deferred their June 2020 rent.
This year, we saw more employers struggle to keep their businesses afloat as the pandemic dragged on. This struggle translated to budget cuts, retrenchments, and a high unemployment rate. The effect is that a lot of Americans became dependent on government support for housing payments.
The problem is that this financial aid is barely enough to cover one month’s rent for many households. In fact, the Census Bureau Household Pulse Survey showed that 20% of renters missed their payment for June 2020. What’s alarming is that it seems we can expect this deferment to be one of the renting trends of 2020.
4. 66% of households with less than $25,000 income have used their Economic Impact Payments Checks on rent payment.
American households consider the rental payment as a priority and a necessary expense. However, given the current health crisis that has affected Americans’ income, households are unable to make regular rental payments. The national eviction statistics estimate that a huge number of households won’t be able to make their monthly rental payments without any aid from the government. And this is evident as 66% of households under the $25,000 bracket have already spent their Economic Impact Payments Checks on their rent to avoid deferment.
5. The national average monthly rent in February 2020 was $1,468.
Apartment rental statistics recorded the US’s average rental rates at $1,468 in February 2020. This rate is a significant increase since the September 2016 rate of $1,348. Further graphs have also recorded that drastic increase happens during spring and early summer, and tends to slow down during the rest of the year.
6. Americans paid $512 billion in rent in 2019.
(The Real Deal)
According to 2019 rental statistics, the total bill for rent for the nation has reached $512 billion. This figure is 10% more than the average total rental bill of the decade. Reports attribute the increase in 2019’s total rental bill to the rising number of renters and the soaring rental rates.
7. Single family homes account for 39% of rental units in the US.
Single-family detached home rentals were previously viewed by investors as a less profitable asset type. They think that these units tend to be costly to maintain and manage. But a shift in the market is recently seen as investors are starting to see the earning potential for these units because of older millennials looking to relocate to the safer suburban and rural areas but don’t have enough savings to purchase their own property. Nowadays, single-family detached homes account for more than a third of all housing rental units in the US.
8. US renters paid $4.5 trillion in rent in the last ten years.
The US rental market is one of the biggest sources of money for the economy. Zillow estimates that renters in the US paid a total of $4.5 trillion in rent in the last decade. This is a lot of money, considering that this amount is higher than Germany’s GDP in 2018.
9. 45% of renters regret renting.
In a survey conducted among 10,000 homeowners and renters from 20 different metros, 45% of those living in rental housing said they regret not purchasing their own homes. There are three identified reasons for this renters’ regret. The first reason is the lost opportunity in building equity on a home. The second is their inability to customize a rented home according to their personality and preferences. And lastly, they couldn’t control the steep rental rates that are increasing year-on-year.
10. The median rent takes up 29.1% of average household income.
From 1985 to 2000, the average household spent 25.1% of its income on rent. Two decades later, the percentage is up by 2.3 points. The median rental rates now take up 29.1% of a typical household’s income. That’s a huge chunk taken out of a family’s income. It’s estimated that a typical family now has to spend $2,000 more every year on rent.
11. Total revenue from vacation rentals in the US is projected to exceed $88 billion by 2023.
Vacations are considered essential to the mental well being of workers and employees. This is why it’s considered a stable industry and why we continue to see a year-on-year growth per vacation rental industry statistics. In fact, the US vacation rental market is expected to get past the $88 billion mark by 2023. This growth is credited to the shift in vacationers’ accommodations preference from hotels to rental properties because of the privacy and the lesser rates the latter can offer.
12. Cost-burdened renters increased by 261,000 in 2018.
(JCHS Harvard University)
Cost-burdened households are those who pay more than 30% of their income for rent or housing. In 2018, the number of cost-burdened households increased by 261,000 families, giving a total of 20.8 million cost-burdened renters. This figure came from both middle and high income renters across different metros.
Much like the increasing real estate home purchases, the rental home industry is also seeing a rapid rise in demand. Let’s see where this demand is coming from by analyzing the market data from renter demographics 2019 and 2020 in the US.
13. Almost half of the renters in 2019 were aged below 30 years old.
Based on rental rates movement and rental price trends, millennials now have to pay 39% more than baby boomers did at their age to purchase a home. This rising cost would have been acceptable if it was directly proportional to wage increases. But that’s not the case. It’s said that it would take millennials ten years to save up for a 2% down payment on a home purchase.
The effect of all these rental industry statistics and trends is that millennials are more interested in renting an apartment than purchasing a house. And this is evident in our renters’ demographics as almost 50% of renters in 2019 were younger than 30 years old.
14. Immigrants make up 20% of the number of renter households in the US.
Joint Center for Housing Studies of Harvard University conducted research that profiled renter demographics in the US. They’ve observed two things from the data. They’ve found that the renting rates for minority groups, such as Hispanic and African Americans, were higher compared to white Americans. They’ve also found that 20% of renters are immigrants or foreign-born.
15. Among householders under 25 years old, 78% are renters.
Statistics on renter demographics show that the younger generations are now more inclined to rent out apartments than purchase homes. Unlike buying homes, renting provides them with the mobility they need when pursuing career development in different locations. This is why 78% of adults below 25 years old who are mostly seeking to establish careers are renters.
16. Around 108.5 million Americans rent their living spaces, according to a 2018 decade report on how many Americans rent homes.
The Great Recession of the late 2000s has dramatically changed the landscape of the real estate industry. More Americans have shied away from the real estate market and moved from homeownership to renting. The rental market statistics put the number of renters at 108.5 million, which is 34% of America’s population. This may be due to the perceived affordability of renting.
17. There are over 43 million renters in the US, and almost half of them lost their jobs to the pandemic.
Statistics report that 40% of all housing in the US belongs to renters. That’s a total of 43 million renters across the nation. Out of all those people, 20 million lost their jobs to the pandemic. This figure poses a problem not just for the out-of-job renters who struggle to pay their rent but to the landlords as well, who still need to pay mortgage and taxes.
Statistics on Rent Vacancy Rate
The rental vacancy rate is a helpful indicator of the rental market’s health. When a vacancy rate falls below 7%, the demand for rental properties is said to be high. Conversely, if the vacancy rate increases to 12%, the demand is said to be low.
The level of demand isn’t just the only explanation for the changing vacancy rates. Another possible reason for increasing vacancy rates is eviction due to renters who are unable to pay their monthly rent. Here are some of the data on eviction and vacancy rate.
18. Vacancy rate in 2019 was at 25%. In 2009, it was 40%.
The US rental market has seen a decreasing trend in the vacancy rate in the last ten years. In 2009, the vacancy was at an astonishing 40% rate. In 2019, the rate decreased to 25%. We can assume that this decreasing trend reflects a growing demand among Americans who prefer to rent homes instead of bying them.
19. 40% of renters are at risk of eviction.
The federal government was forced to extend financial help when a great number of renters lost their jobs because of the pandemic. However, this support can’t go on for long, which is why the government has hinted that it has plans to make cuts on its financial support. If the pandemic persists, experts estimate that as much as 40% of renters might face eviction in the next couple of months.
20. West Virginia will have the highest percentage of renters facing eviction at 60%.
Surveys have determined that eviction rates may vary depending on location. The provided rental statistics by state have helped experts deduce that some cities and states will be hit more than others. For example, West Virginia may experience as much as 60% of renters getting evicted, whereas Vermont may only see 22% of evicted renters.
21. Vacancy rate in Manhattan climbed to 4.3% in July, which is the highest percentage in 14 years.
(New York Times)
In July 2020, New York witnessed the highest number of listed apartments in the last ten years. This surge in supply has forced landlords to lower their rental rates, offer up to three months free rent, and oblige to brokers’ steep fees. Even with these measures, New York’s rent vacancy rate in July was at the highest percentage the state has seen in 14 years. Even New York’s posh borough, Manhattan, the center of commerce and business in the city, experienced a 4.3% vacancy rate, the highest seen in the borough in 14 years.
22. In June and July 2020, over 120,000 apartments were for lease in New York.
(New York Times)
Employees in New York are slowly leaving the city as each one starts to experience loss of source of income. They are forced to stay in their home states. This led to 120,000 listed apartments in June and July, a 26% increase in vacant apartments since the same months in 2019.
23. If conditions don’t change, 29-43% of renters could be at risk of eviction by the end of the year.
Several researchers and academics have been monitoring the effects of the public health crisis and the economic crisis on household renters using different approaches, techniques, and rental market trends. They all agree on one point — should the global health crisis continue, 29% to 43% of renters might face eviction by the end of the year.
24. 78% of renters who moved from one property to another experienced rent hike.
Willow found that 78% of renters who moved from one rental place to another experienced skyrocketing rental rate hike. While it’s common for renters to move from one rental property to another for different reasons, such as career advancement and change in relationship status, rental rate hike plays a significant role. In fact, 69% of those who relocated said their decision to move is directly tied to the rental price hike.
25. The apartment rental industry’s market size in the US has grown 1.7% per year on average between 2015 and 2020.
Despite the recent setback in the economy and real estate industry due to the pandemic, research has shown that the market size for the rental industry has grown in the span of five years at an average rate of 1.7% per year.
26. Landlords have raised rental rates at an average of 31% since 2010.
Landlords raise rental rates for many reasons. The rental price hike could be a way for landlords to pay for property maintenance, to be able to afford improvements on the property, to accommodate escalating taxes, or to increase their profit. Whatever the reason, what’s clear is that rental rates have been increasing at a steady pace for almost a decade. In fact, the average rent increase percentage was 31% since 2010.
27. According to statistics on landlords, 89% of landlords cover property repair costs.
One of the advantages of renting homes instead of buying is that most tenants don’t have to worry about maintenance and repairs. This is a big deal since repairs cost a lot of money. However, we must keep in mind that not all landlords and property owners shoulder repair costs. It’s estimated from rental property owner statistics that only 89% of property owners shoulder repairs of damages in the property.
28. Evicting a tenant costs a landlord up to $10,000.
When a renter defaults on his monthly rental payments, not only does the landlord lose his stream of income, he might also lose more money to taxes and other fees associated with owning the property. For this reason, a lot of landlords opt to evict current renters to get new renters who can pay the rent. The problem is that eviction also costs a lot of money. The process of evicting a renter could cost the landlord as much as $10,000.
Other Rental Stats
29. The rental industry provides jobs for over 850,000 people.
It’s not just the landlords who earn money through the rental industry. The market also provides jobs for 850,000 people employed as brokers, property managers, customer support, and marketing associates.
30. 10.6 million Americans earn income from rental properties.
Approximately 10.6 million people earn their income from 17.7 million rental properties. This figure was deduced from the income taxes filed by owners from the different landlord demographics and those employed in the rental industry.
Like housing prices, rental rates fluctuate every couple of months and years, as we’ve seen in some rental stats and figures presented. Like many things, the rental rates are dependent on supply and the influx of demands. If the supply is low and the demand is high, prices are likely to skyrocket.
In the past couple of years, rental rates have been increasing steadily, making the living in the US costly for some people. But every so often, something happens to the market that reverses the trend, like the current global health crisis.
The question of whether renting is a better option than buying depends on a household’s stability. Buying a home doesn’t seem to be a wise choice for households that expect to move a lot, especially for career advancement. With that in mind, households can see renting as part of a season of transitions.
People Also Ask
Most people say that money spent on rent is money that’s gone. But that’s not entirely true. Renting provides shelter, safety, and refuge for a tenant. And those are the things we can’t put a price tag on.
Most landlords require their tenants to have income that’s three times more than the rental rate. While not all landlords require this, there’s a reason for the creation of this benchmark.
According to HUD, households are considered cost-burdened families if they spend 30% of their income on housing or rent payments. This classification makes sense because of the rising cost of living in most states in the US.
The answer lies in the household’s financial capacity. When a household buys a home, they’re not just going to pay for a mortgage; there’s also property tax, maintenance, and insurance that needs to be paid.
Landlords require possible tenants proof of income that’s three times the rent to ensure that the renter can afford the rate and that they won’t defer on their rental payments. This is also to avoid eviction, which is costly on the part of the landlord.
When choosing a state to live in, it helps to know which places offer the cheapest rental rates. According to the rental statistics, the cheapest studio apartments can be found in College Station, Texas. This may be because the location itself is home to Texas A&M University’s main campus.
The cheapest one-bedroom apartment can be found in Niles, Ohio, while the cheapest two-bedroom apartment is located in Morganfield, Kentucky.
There are many ways to determine if an apartment is well within your budget. One of the most common rules people use is the 40x rent rule. This rule means that the annual gross income should be at least 40 times the monthly rent.