Gen Zers and millennials are postponing buying their first home, a growing number of older people are renting, and tenants are staying in their rentals for longer. This adds up to a record-high number of renters and an increasing share of those renters in older generations.
“Renting today isn’t just for young adults starting out,” said Nadia Evangelou, a senior economist for the National Association of Realtors. “It’s actually a much more mixed picture. Over the past decade, we have seen more older millennials and Gen Xers staying in rentals longer, and even some boomers, for example, opting to rent later in life.”
The overall number of renters has grown over the last several years. There were 45.6 million renter-occupied housing units in the US in 2023, up from 39.7 million in 2010, based on the Census Bureau’s American Community Survey.
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The US is also seeing an uptick in older tenants. An Urban Institute projection found that the share of people 65 and older who rent their homes will grow from 22% in 2020 to 27% in 2040 — an additional 5.5 million renting households. Older Black renters will see the biggest jump, doubling in number between 2020 and 2040.
A smaller share of US renter-occupied housing units were headed by people under 35 years old in 2023 than in 2010. Meanwhile, the share of rental households headed by someone 65 or older grew over that period.
Renters are staying in their homes longer as well, per a Redfin analysis of Census Bureau data.
“Renting is becoming less of a short-term stop and more of a long-term reality for many households,” Evangelou said.
Renting could be a smart financial move
The main reason people are renting for longer: the surging cost of homeownership. Home prices have soared across the country amid a housing shortage. At the same time, property taxes, home insurance, and home repair and maintenance costs are on the rise.
All of that has made renting a better deal than buying in many places — a reversal of the historic norm. Indeed, homebuyers purchasing starter homes in 50 major cities in 2024 spent over $1,000 more on housing costs each month than tenants do.
To be sure, many renters are struggling, too. Tenants’ incomes aren’t keeping up with rising housing costs, and a rising share of renters are cost-burdened, meaning they spend more than 30% of their income on housing.
Some Americans are renting for longer by choice. Rich renters are on the rise. Many millionaire millennials and boomers with healthy savings, who could afford to buy a home, are opting instead to rent. They like the flexibility of a lease, the convenience of having a landlord handle home maintenance, and the amenities luxury rentals offer, like in-building doggy day care, dry cleaning, and yoga classes.
“I think of renting as paying for a service, and liken it to a hotel,” start-up founder Tori Dunlap, a 30-year-old multimillionaire, told BI last year. “Renting is flexible, and I don’t have to worry about things that homeowners worry about, like committing to a particular place or neighborhood or dealing with a burst pipe.”
Some of these affluent renters opt instead to keep their money in the market or other more flexible, higher-return investments.
“People are reevaluating whether or not they want their homes to be their asset wealth-builder,” Doug Ressler, an analyst at Yardi Matrix, part of the property-management software firm Yardi, said. He added that higher-income tenants “want to have the freedom and mobility of time, and they don’t want to be saddled with the things that a house brings with it.”
Some financial advisors are also challenging the conventional wisdom that buying a home is a smarter financial decision than renting.
“You’ve been lied to about buying property,” Ramit Sethi, a popular financial advisor and star of the Netflix show “How to get rich,” said in a 2023 video titled “Why I Don’t Own a House as a Multi-Millionaire.”
Sethi recommends that those who buy a home take into account the “phantom” costs of maintenance, repairs, insurance, and buying and selling fees, and urges them to maintain diverse investments.
