By the Numbers
A demographic snapshot of the renter and the homeowner
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This material does not constitute research.
The pandemic drove a migration of urban, multifamily renters into suburban, single-family rentals. The long-term implications are not yet clear. These tenants eventually could become homeowners or could settle in as long-term renters. There are some significant differences in the demographic and financial profiles of tenants and homeowners, and single-family renters tend to emerge in the crossover space between the two.
Owner versus rental housing
They are approximately 122 million occupied homes or households in the US, with 64.4% owner-occupied (78.8 million) and 35.6% rented (43.6 million) (Exhibit 1). Total US housing stock is roughly 143 million, which includes vacant, seasonal and other homes not used as primary residences.
Exhibit 1: Occupied US households are 64% owned and almost 36% rented
Note: *Estimated holdings of detached, single-family homes of institutional SFR operators. Household data is from 2020. Census Bureau estimates for 2022 put total households at about 129 million. Different Census Bureau surveys use different methodologies and estimates can vary modestly.
Source: US Census Bureau, American Community Housing Survey, Amherst Pierpont Securities
The majority of owner-occupied homes are single-family structures (69.7 million or 88%), while the majority of renters live in traditional multifamily buildings (27 million or 62%) with between two and 50 or more units. There are 84.4 million occupied single-family structures, which comprise 69% of total households, with 14.7 million of those (17%) being occupied by renters. Recent estimates are the institutional single-family rental (SFR) operators own about 350,000 homes; that is 2.4% of the 14.7 million single-family rental homes and 0.4% of total single-family households.
The differences between renters and homeowners
There are some significant differences in the demographic and financial profiles of renters and owners. Renters tend to be younger than homeowners: 35% of renters are below the age of 35, compared to only 10% of homeowners (Exhibit 2). Renters also tend to have less education than homeowners, with less than 30% of them completing a bachelor’s degree or higher, compared to nearly 40% of homeowners.
Exhibit 2: Renters tend to be younger and less educated than homeowners
Note: Data as of 2020.
Source: American Community Survey, US Census Bureau, Amherst Pierpont
Homeowners are more frequently white and have significantly higher mean incomes than renters (Exhibit 3). The median income for homeowners was more than $81,000 in 2020, compared to a median income for renters of $42,000. Nearly 40% of homeowners have incomes above $100,000 compared to just 16% of renters. Some of this difference is due to the younger age profile of renters, though over time the lower educational attainment is correlated to lower lifetime earnings.
Exhibit 3: Renters are more ethnically and racially diverse, but skew to lower average incomes
Note: Racial and origin percentages do not sum to 100% as some respondents identified themselves across multiple categories. Data as of 2020.
Source: American Community Survey, US Census Bureau, Amherst Pierpont
The median monthly housing cost for renter-occupied homes was $1,096 in 2020, compared to $1,142 for owner-occupied properties. Across income levels, the percentage of renters who are cost burdened—meaning they spend 30% or more of their monthly income on rent—is typically much higher than the percentage of homeowners. The percentage of owner- and renter-occupied households that are cost burdened declines as income rises. At income levels below $20,000, 89% of renters and 76% of homeowners are cost burdened; this falls gradually to 28% and 23%, respectively, for household incomes between $50,000 to $75,000. The difference between renter and owner households mostly converges at higher household income levels, where 7.2% of homeowners with incomes above $75,000 are cost burdened, compared to 7.6% of renters.
The single-family renter
This crossover to higher household incomes is the target for many single-family rental operators. Single-family homes have higher rents and operating costs than traditional multifamily, and they appeal to suburban families that need more room. SFR operators are typically not competing with low-income or affordable housing providers, in part because the economics of single-family rentals don’t work for the median or lower-income tenants or landlords.
Arguably, all SFR investors do compete with upper middle income, prospective first-time home buyers. Institutional scale operators remain less than 3% of the single-family rental market and own less than 0.5% of the existing supply of single-family homes.
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