While some have yet to label it a “crisis,” the housing market in the United States is certainly troubling. Houses are more expensive than ever before, mortgage rates are up, and millions of Americans can’t afford to buy a home.
Consequently, the newest data shows that many Americans are changing the way they rent; not only are they renting for much longer, but they’re also staying in one place.
Renters Are Staying in Their Apartments Much Longer
Real estate brokerage firm, Redfin, recently released a report explaining the new renting trends throughout the US. The report noted that many Americans are staying in their rented homes much longer than they used to.
On average, 16.6% of renters stay in their homes for at least ten years. In 2014, only 13.9% of Americans were living in the same rental for more than ten years, and while 3% may not seem like a big jump, that’s actually millions of people.
Renters Aren’t Moving From Place To Place
The Redfin report goes on to explain that, while 16.6% of American renters are staying in their apartment for more than ten years, 16.4% are staying for between five and nine years.
Additionally, 41.8% of renters are living in the same home for between one and four years, which is 33.9% more than a decade ago. The only statistic that has decreased is renters who leave their homes before the year; in 2014, 32.2% left before 12 months, whereas in 2024, only 25.2% moved before the end of the year.
Why Aren’t American Renters Moving?
Of course, there are many personal reasons why millions of Americans have decided to stay where they are instead of moving as they used to.
But the most common reason many renters may choose to renew instead of leaving for a new apartment or house is because it saves them money. Even if the rent increases, which it often does, it’s still far cheaper to stay put instead of moving.
The Cost of Renting in America Is Through the Roof
It’s important to note that while the cost of buying a house has increased significantly over the past several years, monthly rentals have also skyrocketed.
In fact, rent prices have increased by more than 20% since 2019. Because of the jump in rent, many Americans have found it challenging to move to a new rental even if they want to, as the majority are simply too far above their budget.
There Simply Aren’t Enough Housing Options for Americans
Some housing experts believe that the main reason only 21% of renters decided to move in 2022 was not to save money.
Instead, they argue that the driving factor in the increasing long-term rentals is that there simply aren’t enough homes and apartments for rent. However, not everyone agrees with this theory.
Remaining in the Same Apartment Is a Smart Choice for Future Home Buyers
Other experts believe that this changing trend really is based solely on the financial benefits. As many Americans are struggling to save money, the easiest way to do so is to pay as little for rent as possible.
Millions of Americans are likely staying in their rented spaces for longer periods of time in order to save up enough money to finally buy the home of their dreams, or at least one they can afford.
Millions of Americans Hope to Be Able to Afford a Home Someday
Redfin Senior Economist Sheharyar Bokhari explained, “Staying in the same home means they’re likely to face smaller rent increases, and they’re saving money on moving costs and application fees.”
Which, of course, is the ultimate American dream that has become far more challenging than ever before.
Very Few Americans Can Afford to Buy a Home
Sadly for young Americans, housing prices have doubled since 2012, and increased by a whopping 54% in the past six years.
And because wages are all but stagnant, millions of Americans simply cannot afford the new outrageous prices. While this is devastating for the next generation, it will also have a significant impact on the housing market and the country’s overall economy.
High Mortgage Rates Are Intensifying the Housing Crisis
While the prices of homes have undoubtedly increased to almost unbearable levels, extremely high mortgage rates are also playing a big part in the ongoing housing crisis.
Mortgage rates rose again at the start of 2024 to 7.2%. Shockingly, that means the current rate is more than double the 2015 rate of 3.9%.
Will the Cost of a New Home in the US Ever Go Back to Normal?
The housing market is certainly one of the most volatile; it can change drastically in just a few short months. So, while housing costs are still exceptionally high, that doesn’t mean they’ll stay that way.
In fact, in March 2024, some home sellers lowered their prices for the first time since 2022. And this trend could continue if motivated sellers are tired of waiting for Americans to save up enough to buy an expensive home.
The US Real Estate Market May Get Worse Before It Gets Better
It’s disappointing that millions of Americans are being forced to rent for far longer than their parents did in order to save money to buy a home. However, experts worry that this isn’t just bad news for Americans; it’s a bad sign for the real estate market.
Realtor.com chief economist Danielle Hale explained, “If a household stays put in a home or neighborhood that is not a good fit because they can’t find other options that meet their needs or budgets, this can be an indication of a problem in the real estate market.”
