The amount of American homes rented by homeowners has risen to a 25-year high in the first quarter of this year, according to data from the University of Michigan-Dearborn.
The number of homeowners renting out their residences has remained steady for the past few years, but the number of new homes rented out by homeowners has risen in every single quarter since the Great Recession began in late 2007. The latest figures are from a report by the U.S. Census Bureau and the Federal Reserve Board.
Compared to other recent historical research, the percentage of homeowners renting has moved steadily higher each quarter since mid-2011. That’s even as overall homeownership rates have not risen.
The shift also is reflective of a decline in homeownership for the first time in 15 years.
The University of Michigan-Dearborn’s non-seasonally adjusted estimate of the share of households that have rented their residences during the first quarter of this year rose to 16.4 percent, up from 16.1 percent a year earlier. The share has been climbing for the past 13 quarters.
The percentage was still lower than the peak of 19.2 percent in the second quarter of 2006, just before the Great Recession, but it was higher than the 17.2 percent in the first quarter of 2014. In some regions, including the Midwest, it was higher than it was in the second quarter of 2006.
The rental share was 26.8 percent in the South and 25.4 percent in the West. The share of rental households had risen fastest in the Northeast, and in each region, the rise was far faster than the rise in homeownership.
Renters tend to have lower incomes and student loan burdens than homeowners.
To boost household income and to encourage homeownership, policymakers have reduced the tax-break on mortgage interest. At the same time, the Federal Reserve is reducing its purchases of mortgage-backed securities. Those policies have driven up long-term mortgage rates, making it harder for homeowners to borrow to buy homes and discouraging some potential homebuyers from even considering buying homes.
The rise in rental housing can help slow economic growth and reduce demand for rentals. One downside is that, as housing prices rise in many markets, it can make renting less affordable for households. For many, rental housing is the preferred alternative, even in a low-growth economy like the one now.
The report was partly based on data from the Census Bureau’s American Community Survey.