New Renters Will Outpace New Homeowners Over Next 15 Years

Washington, DC, July 27, 2015—For the next 15 years, new renters will outpace new homeowners, according to the study “Headship and Homeownership: What Does the Future Hold?” by the Urban Institute.

From 2010 to 2030, there will be four million more new renters than new homeowners.

The Urban Institute’s study of household formation and home ownership rates from 2010 to 2030 reveals that new renters will outpace new homeowners in the coming decades and, that, while there will still be more owners than renters, the homeownership rate will continue to decline. This will create intense competition for rental housing.

In addition, the aging of the population will also create the urgency to develop policies to allow the 20 million new seniors that we will have by 2030 to stay in their homes, as most want to do.

The study also projects that African Americans will fall further behind and Hispanics will improve their rates of homeownership. According to the study, these estimates make it clear that we do not have adequate policies in place to support the rental surge and adequate affordable rental housing and homeownership for all, regardless of race and ethnicity.  

Key findings of the report follow,

* For the next 15 years, new renters will outpace new homeowners. The total number of homeowners will grow, but the homeownership rate will continue to drop as more people of all ages—but particularly millennials—choose renting over owning. When millennials have reached their prime home-buying age in 2030, only 38% will own homes compared with 46% of baby boomers in the 1990s.

* The headship rate—the pace at which people create new households—is declining further. The rate peaked in 1980, and it's been trending down since then for people in every age group except the oldest Americans. It will continue to decline into 2030.

* The overwhelming majority of new households formed from 2010 to 2030 will be nonwhite. An estimated 43% of these new households will be Hispanic, while only 18% will be white.

* The overwhelming majority of new homeowners will also be nonwhite. More than half the new homeowners will be Hispanic. Less than 7% will be white. The gap between Hispanics' and African Americans' homeownership rates will grow. African Americans were hit hardest in the housing crisis and will see a large decline in their homeownership rates regardless of economic growth.

* The number of senior households will expand dramatically from 2010 to 2030. More than half the growth will be households over 65. By 2030, 74% of householders over 65 will be white, compared with 56% of those under 65.