Dive Brief:
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In 21 U.S. cities with populations greater than 100,000 in 2015, at least half of residents rented their homes, according rental listing website Abodo, citing data from the U.S. Census Bureau’s 2015 American Community Survey. That’s up from 14 cities in 2012, 18 in 2013 and it is on par with 21 in 2014.
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The list includes a host of California cities, with Los Angeles and San Francisco among them, as well as smaller, fast-growing East Coast markets like Fayetteville, NC and Gainesville, FL. Another six cities, including Durham, NC, Lubbock, TX, and San Diego recorded a 49% share of renters.
- Young adults aren’t leading the renter charge outright, though they are pacing it. According to the survey, 18.62% of renters are between the ages of 45 and 54 while 14.13% are ages 55 to 64. Still, more than half of renters are between 15 and 44 years old. Meanwhile, 77.16% of owners are over the age of 45.
Dive Insight:
Abodo attributes the rising share of renters to elevated home prices as well as to growth in college and university populations in some communities on the list and proximity to military bases in others, which in both cases yield a transient population that moves frequently.
The survey builds on a report by Abodo last month forecasting that rents nationwide, particularly in the South and Midwest, would continue to rise this year. Meanwhile, online apartment finder Zumper reported that U.S. rents rose 0.4% in February, with declines in major coastal markets outweighed by higher prices in central and southern markets.
Rents are dropping in large cities in part due to oversupply. Citing real estate research firm Axiometrics, The Wall Street Journal last week noted that large banks are pulling back from financing multifamily projects. The category expected to reach its highest level in 30 years in 2017, and lower rents are anticipated as one outcome. Additionally, developers are being forced to explore alternative financing options.
Chicago and Washington, DC, are among the cities preparing to see rents moderate in the upper tiers of the market as supply there outpaces demand.
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