Housing & Mortgage
More Cities are Majority-Renter; Boosts Support for Homebuilding
Renters are voting and often disagree with homeowners
Never mind political parties. An increasing divide in some major U.S. cities is between homeowners and renters.
Put plainly, constricting the supply of new homes —limiting building, be it through zoning or other means — boosts the value of existing residential real estate, especially if population and employment in an area are growing. That makes a homeowner’s residence more valuable, which they tend to like. And it drives up rents, which renters tend not to like.
Traditionally, renters have had less sway politically, partially because they tended to vote less and move around more. But today’s renters move less than in the past, they’re more affluent, and they’re beginning to pack more political punch.
Renters outnumber homeowners in a growing number of cities, as more high-income Americans rent than ever before. If you favor either growth in local housing stock or the constriction of growth, you’d do well to look at the balance of owners and renters in a city you might buy in.
During the last decade, renters became the majority in 20 more cities across the country, according to an analysis by RentCafe. Overall, the U.S. had 108.5 million renters in 2018, up from 99.4 million renters in 2010. Roughly 200 million Americans were part of home-owning families.
Renters tend to vote for and get some level of rent control in cities they dominate politically. California recently banned landlords from raising rents more than 5% above the inflation rate. Oregon passed a similar law. New York City, long majority-renter, strengthened its rent-control measures.
But the greater economic effect may be on housing construction. Up and down the West Coast there is a housing shortage. But cities have for the most part refused to loosen zoning to increase development because politicians fear the wrath of homeowners. At least twice, California state legislators have taken up a bill to usurp some local zoning powers to spur housing development, but then backed away from it.
The housing shortages have led to sharply higher home prices; pushed middle-income families and others out of popular cities; and subjected service workers to long commutes from distant suburbs. The shortage and regions’ inability to do much about it has made local housing a national political issue in the presidential campaign.
Cities going majority-renter:
Dayton, Ohio: 56.5% of households were renters in 2018, up from 46.9% in 2010.
Waterbury, Connecticut: 56.0% were renters, up from 48.8%.
Killeen, Texas: 55.5% are renters, up from 46.2%.
In the short term, the coronavirus-induced recession may shrink the number of rental households as more people double up in apartments and young renters are forced to move back into their parents’ house, said Whitney Airgood-Obrycki, a research associate at Harvard’s Joint Center for Housing Studies.
But the recession is also destroying a lot of wealth, as unemployed workers dip into their savings. When they start working again, these workers may be unable to buy a house for a long time. “They could have trouble affording down payments, which could push up the renter rate,” Airgood-Obrycki said in an interview.
A number of factors drove the surge in renters.
—Many homeowners lost their homes during the housing bust a dozen years ago and are still renting. The home ownership rate is now 65%, down from 69% in 2005.
—A growing group of high-income Americans are opting to rent instead of own, some because it’s the only way they can afford to live close to high-paying jobs in places like San Francisco. The number of renters who earn more than $150,000 a year grew by 157% over the decade, RentCafe found.
—The number of renters over age 60 grew 32% during the decade, with the graying of the baby boomer generation.
—It’s not just cities. Airgood-Obrycki analyzed metro area Census data from 2006 to 2018, and found renters were gaining share in suburbs, too.