There was a time in American history when apartment living, particularly in the suburbs, was reserved for 20-something year olds who were happy to look beyond the cramped spaces and odorous carpets of multi-family housing units in their quest for cheap housing and freedom from the parental units. But, as the Rent Cafe Blog points out, Baby Boomers are increasingly giving up their participation in America's perpetually re-inflating housing bubbles and opting instead to return to the smaller living accommodations of their youth.
We turned to U.S. Census data to see if it can shed some light on how renting has evolved since 2009 — around the time when the scales started tilting in favor of renting. We looked at changes in the number of renter households by age, education level, and family type.
National stats revealed that, between 2009 and 2015, the biggest changes in the renting population came from seniors aged 55 or over (up by 28%), compared to only a 3% increase in renters 34 or younger. By education, the highest increases were in renters holding a bachelor degree or higher (up by 23%), and by family type, in families with no minor children (up by 21%).
What do these three categories have in common? They all point to one group: empty-nest Baby-Boomers. Whether driven by a change in lifestyle, a consequence of the housing crash, or an inability to find affordable homes to downsize, senior households are embracing renting in droves.
“Lowering living expenses, looking for a different lifestyle, less house-related work and overall less responsibility can be achieved by downsizing, so a lot of retirees opt to rent.” says Simona Solomie, a real estate broker with Remax Masters of Morton Grove, Illinois, who works with home sellers, buyers, and renters in the western and northwestern suburbs of Chicago.
Converting that to numbers, roughly 2.5 million senior households joined the renter cohort nationwide between 2009 and 2015, while the number of renter households aged 35-54 added 1.95 million, and those younger than 34 increased by only 0.5 million in the same time frame.
Meanwhile, and not surprisingly, the markets that have seen the greatest surge in boomer renters are those that were hardest hit by the housing collapse: California, Florida, Arizona, Texas....
In all 20 largest U.S. metros studied, without exception, the rate of increase in senior renters greatly surpasses that of younger renters (see the green bars on the graph below).
Between 2009 and 2015, the senior renter population has grown the fastest in the metro area of Riverside, CA (by 63%), followed by metro Tampa, FL by (61%) and by metro Phoenix, AZ (by 59%). However, the largest net increases were in Los Angeles metro (which gained 134,000 new senior renter-occupied households and lost 26,000 renter households under 34 years of age). New York City gained an additional 124,000 renter households over 55 during this time period and about 54,000 under 34.
And here is another look at the market-level data sorted by households:
Meanwhile, it's not just Baby Boomers, the most educated folks of America are also increasingly deciding that they want no part of the Fed's Housing Bubble 2.0.
If there was any doubt left that some people actually choose to rent, even though they could afford to buy, the latest surge in the number of highly-educated renters should help erase those doubts. Of all education levels, those holding a bachelor degree or higher account for the largest share of new renters added between 2009 and 2015 in both suburban and urban areas, percentage-wise and in net numbers. The number of renters who hold a bachelor degree or higher increased by 26% in the suburbs and by 20% in the cities.
The second highest increase in renters comes from people with some college education or equivalent (a 19% increase in suburban areas and 12% in urban areas), while those with a high-school diploma or less accounted for the smallest increase.
The national trend is confirmed at the metro level. In all 20 largest U.S. metros, except St. Louis, MO, the largest gains of new renters were people holding a bachelor degree or higher (green bars on the graph below). In Phoenix metro, renters with a bachelor degree increased by 48%, in Denver metro by 45%, in Tampa, FL metro by 38%, and in Atlanta metro by 37%. At the same time, the number of least-educated renters is decreasing in several metro areas, including Denver, St. Louis, Philadelphia, New York and Boston.
All of which raises the question, if boomers are giving up their basements to move back into apartments then where are their millennial children going to live after graduating with their $200,000 degrees?