End of the 9-Year Rental Housing Boom?

Wolf Richter wolfstreet.com, www.amazon.com/author/wolfrichter

Since the Financial Crisis, the number of renters surged at a blistering pace, and renters became a majority in 42 cities, but the trend has now reversed.

The number of people living in rented housing in the US has surged by 23 million over the past 10 years. This is the period of the includes the Housing Bust. But the number of people living in owner-occupied homes (“homeowners”) inched up only by 679,000.
Over the same period, the total US population has increased by 23.7 million. In other words, the growth in the renter population absorbed nearly the entire growth in the population.
In 2006, of the 100 largest cities, only 20 had a higher renter population than owner population. Ten years later, 42 cities do.
Of the top 100 cities, only three experienced a decrease in rentership rate: Anchorage, AK (-1.3%), Irving, TX (-2.5%) and Winston-Salem, NC (-3.6%). The other 97 cities all experienced an increase in rentership rates, according to a report by RentCafé, based on data from the Census Bureau’s American Community Survey.
The list below shows the 25 cities where the rentership rate has increased the fastest from 2006 to 2016. Gilbert, AZ, is number one. Its rentership rate grew by 53.4%. But Gilbert is special. While the absolute number of renters in Gilbert surged over the decade, the city’s overall population experienced a spectacular boom, and the number of homeowners surged too, and the rentership rate, at 30.6%, remains the second lowest of the top 100 cities, though it grew the fastest.
By contrast, Toledo is number five on this list. In 2006, its rentership rate was 38.3%. Over the past 10 years, the rate grew by 31.3% to reach 50.3%. But Toledo’s overall population declined over the period, which helped boost the rentership rate.
The cities in the list are in order of how fast their rentership rates grew (right column). Even for number 25, Baton Rouge, the rentership rate still grew by over 22%!

City and State Renter Population 2016 Owner Population 2016 Renter Share 2016 Renter Share Growth from 2006 to 2016
1 Gilbert, AZ 72,346 164,311 30.6% 53.4%
2 Plano, TX 96,503 188,625 33.8% 40.0%
3 St. Petersburg, FL 101,539 153,457 39.8% 39.4%
4 North Las Vegas, NV 109,445 127,218 46.2% 38.5%
5 Toledo, OH 136,452 134,621 50.3% 31.3%
6 Fremont, CA 97,391 134,143 42.1% 31.0%
7 Virginia Beach, VA 165,246 276,598 37.4% 30.9%
8 Mesa, AZ 197,885 282,946 41.2% 30.1%
9 Glendale, AZ 108,691 133,269 44.9% 30.0%
10 Colorado Springs, CO 184,836 272,696 40.4% 29.2%
11 Chesapeake, VA 64,156 168,265 27.6% 28.6%
12 St. Paul, MN 140,288 153,368 47.8% 27.6%
13 Memphis, TN 360,449 275,938 56.6% 27.0%
14 Charlotte, NC 380,889 448,459 45.9% 26.9%
15 Tampa, FL 184,029 181,627 50.3% 26.8%
16 Hialeah, FL 128,135 106,234 54.7% 26.5%
17 Jacksonville, FL 366,649 492,838 42.7% 26.4%
18 Stockton, CA 160,957 139,493 53.6% 26.2%
19 Honolulu, HI 189,690 148,736 56.1% 25.7%
20 Anaheim, CA 200,424 146,001 57.9% 25.1%
21 Garland, TX 96,819 137,073 41.4% 24.7%
22 Las Vegas, NV 289,577 335,451 46.3% 24.7%
23 Irvine, CA 128,547 130,084 49.7% 23.2%
24 Chandler, AZ 93,596 153,041 37.9% 22.6%
25 Baton Rouge, LA 113,888 105,220 52.0% 22.4%

Why is New York City not in this list?

With 5.4 million renters, the City’s rentership rate is 65%. But given the gargantuan size of the rental market, even the massive increase over the past ten years of nearly 440,000 renters – more than the entire renting population in Boston – raised the rentership rate by only 4.5%.
RentCafé’s report also found that the overall population shrank in 12 of the top 100 cities. In eight of them – Toledo, Honolulu, Santa Ana, Baltimore, Cleveland, St. Louis, and Chicago – the ownership population took the entire hit, while the number of renters actually increased.
In Detroit, even the renter population decreased 2%, but this was “trivial compared to the 30% setback” that the homeowner population experienced over the decade, according to RentCafé.
The table below shows the top 100 cities in order of their rentership rates (second column from the right). Note that in Newark, Jersey City, Miami, New York City, and Boston, around two-thirds or more of the population lives in rental homes. In the top 42 cities, over 50% of the population lives in rental homes.
Use the search function in your browser to find a city. After you’re finished with the table, move to the section under it where we get into why this shift has happened, where it goes from here, and what it means.

City and State Renter Population 2016 Owner Population 2016 Renter Share 2016 Renter Share Change 2006 vs. 2016
1 Newark, NJ 199,659 68,905 74.3% 3.0%
2 Jersey, NJ 184,156 77,365 70.4% 10.7%
3 Miami, FL 301,082 141,798 68.0% 9.9%
4 New York City, NY 5,441,635 2,919,054 65.1% 4.5%
5 Boston, MA 397,187 226,302 63.7% 8.7%
6 Orlando, FL 172,592 102,510 62.7% 6.9%
7 Long Beach, CA 283,183 178,350 61.4% 9.8%
8 Los Angeles, CA 2,365,634 1,525,562 60.8% 6.2%
9 Cincinnati, OH 170,480 115,623 59.6% 11.8%
10 Oakland, CA 243,423 169,939 58.9% 11.5%
11 Norfolk, VA 127,876 90,720 58.5% 12.7%
12 Washington, DC 375,005 266,396 58.5% 11.5%
13 Buffalo, NY 144,967 102,971 58.5% 9.7%
14 Richmond, VA 123,233 88,602 58.2% 9.1%
15 Anaheim, CA 200,424 146,001 57.9% 25.1%
16 Milwaukee, WI 332,579 245,681 57.5% 14.0%
17 Memphis, TN 360,449 275,938 56.6% 27.0%
18 Santa Ana, CA 186,433 142,907 56.6% 17.5%
19 Irving, TX 134,111 102,753 56.6% -2.5%
20 Atlanta, GA 247,656 192,525 56.3% 11.9%
21 San Francisco, CA 478,400 371,683 56.3% 4.2%
22 Honolulu, HI 189,690 148,736 56.1% 25.7%
23 Cleveland, OH 208,887 164,081 56.0% 16.3%
24 Columbus, OH 462,144 376,953 55.1% 17.5%
25 Hialeah, FL 128,135 106,234 54.7% 26.5%
26 Dallas, TX 711,919 589,813 54.7% 9.3%
27 San Bernardino, CA 110,871 94,581 54.0% 12.2%
28 Houston, TX 1,221,467 1,050,555 53.8% 6.6%
29 Stockton, CA 160,957 139,493 53.6% 26.2%
30 San Diego, CA 730,393 637,809 53.4% 11.4%
31 Baltimore, MD 310,975 281,290 52.5% 15.4%
32 Reno, NV 125,778 114,134 52.4% 9.7%
33 Fresno, CA 268,792 245,102 52.3% 7.6%
34 Baton Rouge, LA 113,888 105,220 52.0% 22.4%
35 Detroit, MI 342,877 316,126 52.0% 17.4%
36 St. Louis, MO 156,218 144,679 51.9% 14.6%
37 Chicago, IL 1,357,704 1,287,263 51.3% 8.5%
38 Austin, TX 475,240 451,205 51.3% 5.9%
39 Minneapolis, MN 200,748 195,277 50.7% 13.9%
40 Toledo, OH 136,452 134,621 50.3% 31.3%
41 Tampa, FL 184,029 181,627 50.3% 26.8%
42 Sacramento, CA 244,394 241,919 50.3% 11.0%
43 Irvine, CA 128,547 130,084 49.7% 23.2%
44 Durham, NC 125,652 127,119 49.7% 0.7%
45 New Orleans, LA 185,353 189,495 49.4% 5.5%
46 Pittsburgh, PA 137,349 142,279 49.1% 18.0%
47 Greensboro, NC 133,548 139,261 49.0% 11.0%
48 Tulsa, OK 193,563 203,204 48.8% 11.3%
49 Seattle, WA 330,968 350,884 48.5% 13.6%
50 Lubbock, TX 116,221 124,643 48.3% 15.7%
51 St. Paul, MN 140,288 153,368 47.80% 27.60%
52 Raleigh, NC 209,715 229,051 47.80% 9.40%
53 Denver, CO 320,149 359,158 47.10% 15.50%
54 Madison, WI 112,987 127,788 46.90% 10.70%
55 Tucson, AZ 235,305 268,609 46.70% 10.80%
56 Las Vegas, NV 289,577 335,451 46.30% 24.70%
57 North Las Vegas, NV 109,445 127,218 46.20% 38.50%
58 Phoenix, AZ 736,340 860,327 46.10% 20.40%
59 Charlotte, NC 380,889 448,459 45.90% 26.90%
60 Philadelphia, PA 695,839 822,943 45.80% 20.60%
61 Indianapolis, IN 379,418 457,115 45.40% 20.40%
62 Riverside, CA 141,022 170,416 45.30% 15.40%
63 Glendale, AZ 108,691 133,269 44.90% 30.00%
64 Winston Salem, NC 103,637 128,789 44.60% -3.60%
65 Nashville, TN 284,198 354,942 44.50% 15.70%
66 Aurora, CO 158,225 201,365 44.00% 19.10%
67 Portland, OR 270,638 352,628 43.40% 13.50%
68 Lexington, KY 131,361 174,306 43.00% 14.00%
69 Jacksonville, FL 366,649 492,838 42.70% 26.40%
70 Chula Vista, CA 113,130 151,889 42.70% 15.50%
71 San Antonio, TX 625,321 844,505 42.50% 19.70%
72 San Jose, CA 427,798 582,949 42.30% 16.00%
73 Fremont, CA 97,391 134,143 42.10% 31.00%
74 Arlington, TX 163,587 224,784 42.10% 8.80%
75 Bakersfield, CA 155,552 216,696 41.80% 9.10%
76 Corpus Christi, TX 132,344 184,925 41.70% 11.90%
77 Kansas, MI 197,052 275,292 41.70% 10.20%
78 Garland, TX 96,819 137,073 41.40% 24.70%
79 Mesa, AZ 197,885 282,946 41.20% 30.10%
80 Lincoln, NB 108,197 158,962 40.50% 19.10%
81 Colorado Springs, CO 184,836 272,696 40.40% 29.20%
82 Fort Worth, TX 339,088 501,463 40.30% 14.80%
83 El Paso, TX 269,654 405,999 39.90% 6.60%
84 St. Petersburg, FL 101,539 153,457 39.80% 39.40%
85 Omaha, NE 172,805 262,056 39.70% 8.30%
86 Louisville, KY 236,550 365,218 39.30% 21.00%
87 Oklahoma City, OK 242,811 380,720 38.90% 10.60%
88 Wichita, KS 146,271 238,393 38.00% 15.10%
89 Chandler, AZ 93,596 153,041 37.90% 22.60%
90 Virginia Beach, VA 165,246 276,598 37.40% 30.90%
91 Albuquerque, NM 206,909 346,541 37.40% 3.20%
92 Boise, ID 81,460 138,621 37.00% 9.50%
93 Anchorage, AK 106,110 184,424 36.50% -1.30%
94 Fort Wayne, IN 92,472 164,267 36.00% 11.90%
95 Henderson, NV 104,200 186,949 35.80% 16.50%
96 Laredo, TX 88,326 166,596 34.60% 1.90%
97 Plano, TX 96,503 188,625 33.80% 40.00%
98 Scottsdale, AZ 78,379 166,628 32.00% 16.70%
99 Gilbert, AZ 72,346 164,311 30.60% 53.40%
100 Chesapeake, VA 64,156 168,265 27.60% 28.60%

Why is this happening?

During the housing bust, millions of people lost their homes (or seen differently, they shed a horribly under-water mortgage that the banks, the Fed, and the US Treasury then ended up with). These folks moved into rental housing. In 2008, the population in rental housing surged by 3.1%, in 2009 by 4.4%, in 2010 by 3.4%. And it continued to rise albeit at decreasing rates through 2015. In 2016, the number of renters edged down for the first time:

The number of homeowners did the reverse. But it is now ticking up again (+0.9% in 2016).
The surge in rentership rates after the Housing Bust has been a boon for developers and landlords, and rents have rocketed higher, which triggered a phenomenal multifamily construction boom especially in large cities where apartment towers are shooting up like mushrooms. All hot housing markets have these construction booms. But just as these towers are being delivered and the apartments are being put on the market, rentership begins to edge down. Soaring supply of apartments meets declining demand for them.
Rents in some of the formerly hottest rental markets are already showing signs of declines – and in some markets, sharp declines. One special case is Seattle, where the construction boom has been nothing but fantastic, and now vacancies are rising and rents are skidding, and they’re falling the most in the Amazon neighborhood, where new supply is piling up the fastest. Read…  Once Hot Seattle Apartment Market Hit by Onslaught of Supply

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