Homeowners Insurance

As Homeownership Rates Recede, Renters Move in

Over the past ten years, renter households have grown in numbers far more quickly than the homeowner population. This trend can be seen not only in millennial homebuying patterns but also in the types of homes that Americans are choosing to rent.

After a decade's worth of demographic and economic shifts, the U.S. has seen significant change in the balance between renters and homeowners. As the increase in renter households continue to outpace the growth of homeowners, renters have also become more likely to rent types of housing that have historically been far more popular among homeowners. We looked at data from the Census Bureau's American Community Survey (ACS) to explore how renting and homebuying have shifted across age groups and structures.

Key findings

  • Millennial homeownership: Between 2009 and 2016, the population of homeowners under age 35 fell by 20% (almost 1.9 million). However, the latest numbers hint at a potential reversal of this decline.
  • Renters rising: Between 2009 and 2017, the population of American households that pay rent has gone up by 15% to almost 43 million. In the same period, the number of homeowners increased by just 0.7% to 75.8 million.
  • Single-family houses more popular: American households have always preferred single-family homes by a vast majority, but a growing number appear to be renting rather than buying such homes.

Millennials are less likely to own a home than to rent or stay with parents, but that could be changing

According to the data, households headed by millennials have experienced two trends over the past decade that both run counter to traditional expectations of homeownership. First, millennials were becoming less likely to own a home than to rent. Second, the combined population of millennial renters and homeowners declined in most years.

Column graph showing the decline in total number of millennial households from 2009 to 2017, with numbers for both renters and homeowners
Column graph showing the decline in total number of millennial households from 2009 to 2017, with numbers for both renters and homeowners

When we examined historical data from the ACS about homeownership, we discovered a gradual drop in the number of households that owned a home and were headed by someone under age 35. These millennial householders accounted for over 12% of all U.S. homeowners in 2009, but fell year after year to a low of 9.8% by 2016. Within the millennial age group, the number of homeowner households fell by 18.5% over eight years.

This trend was reversed only in 2017, when millennials increased their share of the total homeowner population for the first time in the period we studied. 2017 was also the first year that the total number of millennial renter households declined, following years of slight but steady increase to around 15.2 million in 2016. Still, nearly 67% of all millennial households were renters in the final year of our analysis.

How has millennial homeownership changed?

YearHouseholders under 35 (millions)HomeownersRenters
201722.733.0%67.0%
201622.532.6%67.4%
201522.532.9%67.1%
201422.633.7%66.3%
201322.834.6%65.4%
201223.035.4%64.6%
201123.336.8%63.2%
201023.637.7%62.3%
200923.838.7%61.3%
Numbers apply only to householders under age 35

Meanwhile, the overall drop in households under age 35 appeared to support the common trope of millennials staying with their parents further into adulthood. The total number of households led by someone under 35 decreased by 1.1 million since 2009, a loss of 4.7%. However, renters under 35 continued to grow in number almost every year, meaning that the loss of homeowners under 35 was responsible for most of the overall decline.

This suggests that in most years, non-millennial homeowners who aged out of the under-35 group were not being replaced by an equal or greater number of first-time millennial homebuyers. Meanwhile, the renter population grew slightly as some of the youngest millennials formed independent renter households for the first time — but not in numbers large enough to increase the total population of households under 35 years old.

Homeowner households are still the majority — but renters have grown more quickly

Even when we looked at the data for households of all ages, it was clear that until recently, the gap between the number of renters and homeowners had been narrowing for years. While the 75 million homeowner households recorded for 2016 still constituted nearly two-thirds of all households, that was the first year in which the homeowner population stopped falling this decade.

Households that own vs. rent their homes

Homeowner households (millions)Renter households (millions)Ratio of homeowners to renters
201775.843.01.76
201674.942.81.75
201574.742.21.77
201474.841.41.81
201375.140.51.85
201275.539.71.90
201175.938.91.95
201076.138.11.99
200975.337.32.02

In contrast, the population of renting households grew by about 15% between 2009 and 2017, an increase of 6 million households. The declining trend in homeownership and increasing trend in renters combined to cause a steady drop in the ratio of owners to renters. While there were more than two homeowner households for every renter in 2009, that ratio fell to 1.76 by 2017.

Renters are accounting for a larger share of single-family houses

We also examined the trends in rental and ownership for different types of homes. The ACS categorizes households by the structures they live in: single-family houses (both attached and detached), apartments and mobile homes. While the historical American preference for single-family housing has intensified among both homeowners and renters, renters are taking up a growing share of those homes.

Line graph showing the changing ratio of homeowners to renters for single-family houses, mobile homes and apartments from 2009 to 2017
Line graph showing the changing ratio of homeowners to renters for single-family houses, mobile homes and apartments from 2009 to 2017
Image Caption

When we charted the ratio of homeowners to renters for each type of housing, renters accounted for an increasing portion of single-family homes and mobile homes while maintaining their share of apartment homes. Besides supporting the idea that more U.S. households are choosing to rent in general, this trend suggests that people who need single-family houses — usually families — are becoming more likely to rent than buy.

Column graph showing the changing number of renter households from 2009 to 2017, arranged by the type of structure they live in
Column graph showing the changing number of renter households from 2009 to 2017, arranged by the type of structure they live in
Image Caption

Our look at the data around renter households offered further evidence for this hypothesis: Between 2009 and 2017, single-family rentals climbed by 26% to a total of 14.9 million households. While the number of renters increased for all of the building categories recorded by the ACS, the data clearly pointed to renters' growing preference for separate structures.

How might cost affect trends in homeownership?

For most people, the choice between buying and renting a home is primarily a financial consideration. While purchasing real estate offers the chance to build long-term equity with money that would otherwise be spent on rent, the upfront and ongoing costs of homeownership can be significant:

Upfront costsOngoing costs
Down paymentMonthly loan payment
Mortgage closing costsHomeowners insurance
Appraisal and inspection costsProperty taxes
Attorney and escrow feesHOA dues

While this isn't a complete list, almost all of these expenses are either lower or nonexistent for renter households. For instance, the average renters insurance premium is very low compared to how much homeowners insurance can cost. Meanwhile, the property tax and HOA dues for a rented home are almost always handled by the landlord, eliminating hundreds of dollars in additional costs for renters.

The growth of renters relative to homeowners may be an indication that younger households are less willing or less able to meet the extra costs of owning a home. However, it remains to be seen whether these households are delaying homeownership or rejecting it outright.

Methodology

Our analysis of trends in homeownership and renter behavior is based on 2013-2017 5-year estimates from the Census Bureau's American Community Survey. We used data from the following tables:

  • DEMOGRAPHIC CHARACTERISTICS FOR OCCUPIED HOUSING UNITS (S2502)
  • PHYSICAL HOUSING CHARACTERISTICS FOR OCCUPIED HOUSING UNITS (S2504)

In our conclusions about housing structure and ownership, we arrived at the number of single-family homes by combining the ACS numbers for detached and attached single-family structures. Our calculation of apartment units is the sum of data from four separate ACS categories: 2 apartments, 3 or 4 apartments, 5 to 9 apartments and 10 or more apartments.

Our analysis of millennial households is based on the assumption that during the period between 2009 and 2017, all millennial-led households fell into the householder age category of "Under 35 years," which appears in the ACS tables. According to Pew Research Center, the millennial generation is defined as the cohort of people born between 1981 and 1996. By this definition, the oldest millennials in 2017 — our final year of data — were 36 years old.

The figure for the average cost of homeowners insurance is based on our analysis of data from Quadrant Information Services. Quadrant's rates were publicly sourced from insurer filings and should be used for comparative purposes only — you own quotes may be different.

Chris Moon

Chris is a Product Manager for ValuePenguin with years of experience in addressing critical questions about mortgages and homeowners insurance. He spends his time evaluating insurance providers and policy features to understand where consumers might find the most cost-effective coverage. Chris has contributed insights to the New York Times and many other publications.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.