Renters are making up a growing segment of households, driven in large part by people aged 50 and older. Researchers say new construction is lagging demand.
Commenting on a new report on the country's rental housing, researcher Dan McCue said "The numbers are dramatic no matter how you slice them."
Rental vacancy rates are now at their lowest level since 1985, with inflation-adjusted rents rising 3.5 percent annually, noted McCue, a senior research associate at the Joint Center for Housing Studies at Harvard, which publishes a report on the state of rental housing in the U.S. every other year.
The latest report, released in December, showed 2015 was another record-setting year in the number of renters paying more than 30 percent of their income on housing costs. Multifamily housing construction has accelerated to its fastest pace in nearly 30 years, but is still insufficient to meet surging demand, according to researchers.
"While the millennial generation (born 1985-2004) is indeed the largest in history in terms of population, they are only responsible for a relatively small portion of the growth in rental population over the last 10 years, approximately 11 percent," observed McCue. In contrast, he reported well over half of the growth in renters (55 percent) - fully 4 million households- was from people aged 50 and over. Generation-X-ers (born 1965-1984) in the 30-49 year old age group were responsible for 34 percent of all renter household growth since 2005.
"Record-setting demand for rental housing due to demographic trends, the residual consequences of the foreclosure crisis, and an increased appreciation of the benefits of being a renter has led to strong growth in the supply of rental housing over the past decade both through new construction and the conversion of formerly owner-occupied homes to rentals," said Chris Herbert, the Center's managing director.
Among other key findings:
We've been adding nearly a million renter households a year for almost a decade.
The number of renters has grown by 25 percent in the past 10 years.
There were nearly 9 million more renter households in 2015 than ten years earlier.
In the past decade we have seen the largest increase in renters of any 10-year period in history on records dating back to the 1960s.
Supply is responding with more multifamily construction currently under way than in any time in the past 30 years - but the combination of new construction and conversion of formerly owner-occupied units is inadequate to meet demand, putting upward pressure on rents.
The fastest rates of growth over the past ten years have been in high-income renters. The number of renters in the top 10 percent highest income bracket grew by 61 percent, more than double the pace of overall growth in renters.
Families with children made up a quarter of all growth in renters in 2005-2015, roughly evenly split between couples and single parents.
Renters are sitting tight, moving less, and making fewer units available for millennials to enter the rental market.
"Rental housing is home to a growing share of the nation's increasingly diverse households," the report's authors note, adding, "But even with the strong rebound in multifamily construction, tight rental markets make it difficult for low- and moderate-income renters to find housing they can afford." As a result, JCHS found the number of cost-burdened renters set another record last year. "Addressing the challenge of affordability in a time of rising overall demand will require greater efforts from both the public and private sectors to expand the range of rental housing options," the researchers suggested.
The 48-page report, America's Rental Housing: Expanding Options for Diverse and Growing Demand, is available as a free download.