500 Cities show need for more Rental Homes
In the aftermath of the nation's housing-market collapse and
recession, more than 500 midsize and large cities have seen a
rise in the share of homes that are rented rather than owned,
according to a USA TODAY analysis of Census data. Almost 4
million homes have been lost to foreclosures in the past five
years, turning many former owner-occupied homes into rentals. The
shift to rental housing is potentially long-lasting and portends
changes for neighborhood stability and how people build wealth,
economists say. "The changes are big but glacial," says Mark
Zandi, economist at Moody's Analytics.
The swing from owner- to tenant-occupied homes in the past decade
has been dramatic in some places:
- Of the 100 largest cities, some of those with the largest
shifts were Irvine, Calif., which went from about 40% of occupied
homes rented in 2000 to 49.8% in 2010; Philadelphia, from 40.7%
to 45.9%; and Birmingham, Ala., 46.3% to 50.7%.
- Twenty-five cities — including Baltimore, Minneapolis, Salt
Lake City and Sacramento — swung from having more than half
homeowners in 2000 to majorities of renters in 2010. In one —
Reading, Pa. — 57.6% of occupied homes were rentals in 2010, up
from 49% in 2000.
- Florida, California and Arizona had the most cities where the
share of renter-occupied housing grew by at least 5 percentage
points. All three states have been hit hard by foreclosures.
Nationwide, 34.9% of occupied homes — including houses, condos,
and apartments — were rented in 2010, up from 33.8% in 2000.
The Census data that USA TODAY analyzed for cities covered only
housing within the cities' boundaries, not their much larger
metropolitan areas. Vacant properties, excluding seasonal or
vacation homes, accounted for 7.9% of U.S. housing units in 2010.
It's not clear how many of those have since become rentals or
owner-occupied homes. The renter household market remained
fairly stable from 1990 to 2006, says Daniel McCue, senior
research analyst at Harvard University's Joint Center for Housing
Studies. Since 2006, when housing prices peaked, the number of
renter households in the U.S. has grown an average of 692,000 a
year, while owner households have fallen an average of 201,000 a
year, Census surveys show.
Several factors will boost rental growth for years to come, Zandi
says, including continued foreclosures, continued drops in home
prices that frighten buyers and potential cuts to government
subsidies supporting homeownership. On the other hand, 74% of
renters think owning is superior to renting, said a recent survey
by mortgage giant Fannie Mae. "There's still a pull toward
homeownership, although it's been diminished," McCue says.
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