Rise in people renting homes in the biggest cities in the US
More people are renting a home in the largest cities in the United States with new research showing that the largest rise has been in Memphis, Las Vegas and Honolulu.
The majority of people rent instead of own in 29 of the 50 largest cities while in 2006, only 16 of the 50 largest cities were majority renter households, according to the latest study from real estate firm Zillow.
Miami, New York and Boston have the greatest share of renter households. Almost 70% of all households in Miami and New York, and 65% of all households in Boston, rent. The renter rate in Miami rose 6% over the past 10 years.
Meanwhile, Virginia Beach, Albuquerque, and Mesa in Arizona have the smallest share of households who rent. The renter rate in Virginia Beach is 37.8% and is about 40% in Mesa.
The median rent across the US is $1,440 per month, up 1.3% over the past year and the latest trends study from Zillow shows that millennials say one of the greatest barriers to home ownership is saving enough money for a down payment. Other struggles include qualifying for a loan and determining how much home they could afford.
The study also points out that more than a decade ago during the recession, millions of home owners were foreclosed upon and many have yet to purchase a home again. Numerous households became renters at the same time that tight mortgage lending standards and a weak labour market made it harder for young adults to become first time owners.
It explains that even as home ownership slowly climbs back today, rapidly rising home values often make it difficult for younger renters to save enough break into the housing market to begin with.
In 2006 some 31% of all households rented and now that has increased to 36%, higher than the 33% recorded in 2000 before the housing boom.
In Memphis some 56% of all households are rented, up 11% since 2006. The renter rate in Las Vegas is just over 47%, up from 38% 10 years prior.
It suggests that part of the reason may be that home values across the country are rising over 8% annually, with some markets reporting double digit home value appreciation. The median home value in San Jose, for example, have increased by 27% over the past year, with 43% of all households renting, up about 5% since 2006.
‘The share of households that rent surged in the wake of the recession, as millions of families were foreclosed upon and younger adults either chose to or had no choice but to rent for longer,’ said Zillow senior economist Aaron Terrazas.
‘Renting remains more common years after the recession ended and after a historically long national economic expansion. Some of this shift is attributable to lifestyle choices, including young adults delaying marriage and starting families, and a strong preference for living in urban cores where renting is often more convenient and financially feasible,’ he explained.
‘Some is also driven by economic necessity, quickly rising home values can make it difficult for some to enter the market to begin with, and many previously foreclosed families remain unable to purchase again, even years after foreclosure,’ he pointed out.
‘The home ownership rate is slowly rising. The most recent data show a sharp surge in young adult home ownership over the past two years but it will likely take many years, if ever, for it to get back to its lofty pre-recession peaks,’ he added.