SANTA BARBARA, CA—How does the US renter pool rank among those of other developed nations? Surprisingly low, as it turns out. Although the world's wealthiest nation does figure in the top 10, with renters comprising 36.2% of all US households it's on the bottom rung of the top-10 ladder, according to RentCafe.
In fact, says RentCafe, “in a majority of countries around the world people still prefer owning their homes.” Switzerland was the only one of 30 countries analyzed in which renters comprise more than half of all households.
There are five countries in which renters comprise more than 40% of the population, though. In addition to Switzerland with 56.6% renter households, the others include Hong Kong (49% renters), Germany (48.1%), Austria (44.3%) and South Korea (44.8%).
The US does rank higher in terms of renter growth, though: it comes in fourth among the 30 nations, with 9.3% growth in the renter population between 2010 and 2015. Over a longer time period, growth in the renter population is more impressive, with the number of US renters increasing by 23 million during a 10-year period (2006 to 2016) in which the country's overall population increased by 23.7 million. That means the number of homeowners grew by just 700,000 during the period.
Leasing the world among renter growth is the US' former mother country. The UK's share of renter population jumped by 22% between '10 and '15, meaning a gain of 2.1 million renting households in a total population of 65 million. By comparison, the average across Europe is 4%.
RentCafe notes that the increased UK demand for rentals had an effect on rent prices as well, which rose by 14% while house prices increased by 5%, according to OECD data. “In other words, the cost of rent increased almost three times faster than house prices from '10 to '15 in the United Kingdom,” according to RentCafe.
Closer to home, although US growth in the renter population is slower than in the UK, it's still posting some impressive numbers. RentCafe reported last month that 97 of the 100 largest cities in the US saw renting increase faster than homeownership between '06 and '16. The outliers were Anchorage, AK; Irving, TX; and Winston-Salem, NC.
Further, almost a quarter of the 100 largest US cities shifted from owner- to renter-majority between '06 and '16. Renters took over in 22 cities including such key markets as Chicago, San Diego, Detroit, Austin and Sacramento, boosting the total number of renter-dominated cities to 42 during the period.
Among these 100 cities, Gilbert, AZ boasts the highest percentage increase in renter share, with the number of renters growing 53.4% over the 10-year period. “The city's overall population has also more than doubled in a decade, and the vast majority of the new population chose the renter lifestyle,” according to RentCafe.
One market, although ranked only fifth for renter growth, has the distinction of ranking both on that list and the roster of majority-renter cities. That's Toledo, OH, which also saw the largest gain in renter share out of the 22 cities where renters became the majority population.
Two cities in New Jersey have the highest proportion of renters: Newark and Jersey City, each with renter majorities of more than 70%. They're followed by Miami, New York City, Boston, Orlando, Long Beach, Los Angeles, Cincinnati and Oakland, with all but the bottom two having homeowner populations of less than 40%.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
