In the midst of a busy leasing season, it can be hard to find the time to take a step back and ask: Are the kinds of residents who are interested in your properties changing over time? Are you seeing more demand (or less) than you used to? Are there any patterns in the residents who stay put in your properties from year to year, versus those who move out?
There are more apartment units coming onto the market now than we’ve seen since the 1980s, giving renters more choices than they’ve had in the past—particularly at the upper end of the market. But there’s an even broader shift going on in the background that will impact rental demand going forward, and that has to do with renter demographics.
This might sound like a dry topic that’s best left to social scientists. But in fact, anticipating shifts in who’s likely to live in your properties now and in the future is key to attracting and retaining great residents, as well as identifying opportunities to generate revenue.
If you’re not seeing a shift in the kind of renters who live in your properties, you likely will soon. So, here’s how to prepare your properties and update your approach for maximum success.
Shifts in Renter Demographics That Are Happening Now
The Rise of Family Renters
How Common Are Family Renters?
Based on our annual surveys of thousands of renters, we’ve found that multigenerational families make up 25% of renter households, and couples with kids make up 18%. But when you look at single-family rentals, where families tend to live, they’re a lot more common: Multigenerational families make up 34% of renter households, and couples with kids represent 24% within single-family properties.
Why Are Family Renters Becoming More Common?
There are 3 main reasons for the increase in family renters. First: The peak age for renting is 29, and the largest segment of Millennials is now in their late twenties and early thirties, with Gen Z right behind them. This is also the age when young adults are most likely to form new households and start having kids, resulting in more couples and families living in rental properties. In fact, according to our survey, 40% of Millennials, 37% of Gen X renters, and 29% of Gen Z renters have kids living in their households—numbers that are rising rapidly.
The housing market plays into this as well. The fact that homeownership is less attainable than it used to be is another big reason why we’re seeing more families renting their homes. In 2022 alone, the average mortgage payment went up by more than $600 due to rising interest rates—and home prices rose by double digits during the same time period. That means that more people are renting their homes rather than buying them in comparison with the past, and young adults are renting for longer than previous generations. As a result, fewer renters are putting off having kids until they’re able to buy a home of their own.
In addition, our survey found that 79% of today’s renters are paying off debt each month, most often revolving credit card balances, car loans, and student loans. And it’s not just young adults who have debt to contend with—middle-aged renters are actually the most burdened by debt. Between debt obligations and high rent prices, just 22% of renters are consistently able to set money aside each month, making it hard to amass the kind of savings that would allow them to buy a home.
These two factors explain why there are more couples with kids living in rental housing—but what about multigenerational households? For this demographic, the reasons are slightly different.
First: The U.S. population is aging. In 2016, there were 49.2 million Americans aged 65 and older. By 2030, that number will rise to 73.1 million. With members of the Baby Boomer generation—the second-largest living generation—now in their mid-seventies, the population of older adults is growing rapidly. This means that more renter households contain older relatives, such as adult children caring for their parents.
In addition, the population is growing more diverse, which is leading to larger households that are more likely to contain children and members of multiple generations.
How Can PMCs Attract & Retain Family Renters?
Here’s how property managers can apply this information to better attract and retain family renters within their properties:
- Highlight any family-friendly features of the property or the local community within your listings. Find out whether there’s a playground, a community center, or a highly rated school nearby. Ask yourself what the layout of the unit is like—will it allow a larger family to really spread out and enjoy the space?
- Make units more adaptable to residents’ evolving needs. Are there any updates you can make to ensure the unit is accessible and child-friendly? For example, you could add handlebars in the bathroom, cover up unused outlets, and pad any sharp corners.
- Give them some of the benefits of owning a home. Think about the rental experience from the perspective of a family who wishes they owned their home. What is it they might feel like they’re missing out on by renting that you might be able to provide for your residents? This might range from being able to own a pet and hang pictures on the walls, to the ability to build their credit by making rent payments each month. Making small concessions in certain areas can be worth it if it means a family feels comfortable enough to stay in place for many years.
- Offer incentives to move to another property in your network. Since young adults are the age group that’s most likely to move due to changes in their job or school, think about ways you could increase the likelihood that families want to move to another property you manage—for example, by simplifying the processes involved in applying for a rental and moving in, or bringing down the cost.
The Increase in Single-Family & Suburban Renters
The second demographic we’ll talk about is renters living in single-family homes and suburban properties. These are actually two separate demographics, but they have a great deal of overlap, so we’ll talk about them as one.
How Common Are Single-Family & Suburban Renters?
42% of renters in the U.S. live in single-family rental properties—nearly 45 million people in all. And 25 million of the nation’s 79 million renters live in the suburbs.
Why Are Single-Family & Suburban Renters Becoming More Common?
First, as we talked about in the previous section, the increasing unattainability of homeownership is leading more households to rent; and single-family rentals allow residents to access many of the benefits of living in a single-family property without needing to qualify for a mortgage.
The benefits of living in single-family rentals also include the increased adaptability of these properties in comparison with apartment units. Most residents of single-family rentals are families, and the space that single-family rentals provide makes it possible for households to take on additional members—whether it’s kids, relatives, or pets—without needing to move to a new property.
For the 50% of renters who rent for financial reasons (those who would prefer to live in a home they own, but can’t afford to), single-family rentals achieve four key aims:
- They give residents access to suburban and rural employment opportunities and schools,
- They provide the space that larger households need to live comfortably,
- They free renters from the financial obligations of a down payment, a mortgage, and property upkeep,
- And they’re a critical offering for renters who haven’t yet built up the credit or savings to buy a home, or are rebuilding their finances after a setback.
We’ve talked about the growth we’ve seen in the number of single-family renters; next, we’ll talk about the growth we’ve seen among suburban renters.
It’s a trend that we’ve heard a lot about over the last few years: Renters have gradually been shifting from urban neighborhoods to suburban and rural ones. In 2021—continuing a trend that began in 2020—1.2 million Americans left core neighborhoods within large metro areas and moved to three different places:
- 539,000 moved to small and mid-sized cities
- 428,000 moved to suburbs outside of large cities
- 235,000 moved to rural areas
We’ve also seen this play out within our own surveys. Between 2018 and 2022, we saw a 12-percentage-point shift away from urban neighborhoods, with more than two-thirds of our respondents now residing in suburban and rural areas.
How Can PMCs Attract & Retain Single-Family & Suburban Renters?
When renters look for a home to rent in the suburbs, our surveys found that they care most about three characteristics:
- They want to live in a neighborhood that’s safe and quiet, which is what brings them out to the suburbs in the first place.
- If they have kids or relatives living with them, they want to make sure the neighborhood is family-friendly.
Next, what brings single-family renters to your properties is space, both indoors and out. These residents don’t want to rent a place they’ll only be happy in for a year—they want a home that allows them to spread out and potentially grow their family. And for renters who work from home, having an extra bedroom to use as an office is a major plus.
Within the property itself, renters want a space that includes the appliances they’d be able to find in a home they owned, like central air, a washer and dryer, and a dishwasher. And if they have kids, they want the space to be child-proofed. So be sure to mention these features if they apply to your properties.
Our survey also revealed several amenities that renters find appealing that some property managers might not be offering at the moment:
- High-speed internet
- Lawn care
- Pest control
- Garbage, recycling & compost pick-up
- Regular preventative maintenance visits that go above and beyond the basics, or a priority queue
- Access to shared amenities like a garden, pool, and space to host events, if your rentals are located in a community
The Uptick in Older Renters
The last demographic we’ll talk about in this section is older renters—those that are in the Baby Boomer and Silent Generations.
Why Are Older Renters Becoming More Common?
Earlier in this post, we mentioned that the U.S. population is aging. Currently, older adults make up about 17% of the population; but over the next decade, we’ll see that share increase to 21%, and keep growing from there. To put that into perspective, that means that more than 1 in 5 Americans will be of retirement age by 2030, which isn’t all that far away.
The number of households that rent their homes increased across all age groups over the last decade, but the biggest increase was among older adults. Renting among this age group grew by 32% between 2010 and 2020. This was especially true in Sun Belt metros like Raleigh, Jacksonville, Austin, and Phoenix, where the number of renter households headed by someone age 60 or older increased by more than half.
Here’s why this renter demographic is growing so quickly:
- Older renters are just as impacted by the high cost of homeownership as younger age groups are.
- Many older adults don’t have the ability or the desire to take on the responsibility of maintaining a property on their own as they age.
- Renting actually starts to increase at age 75 after declining in middle age, and the oldest Baby Boomers are turning 77 this year.
Though older adults’ primary reason for renting is the reality that they can’t afford a home of their own, fewer renters selected this reason than we saw in other age groups. Instead, it becomes much more common to rent because they don’t want to care for a home on their own. And also, older adults are more likely to say they rent because they don’t want to deal with the hassle of moving if their current rental already meets their needs. This results in higher retention rates among older adults than any other demographic.
What Do Older Renters’ Households Look Like?
There’s one notable difference in the makeup of older renters’ households versus those of younger age groups: More than half live alone. Many of these renters are living on a fixed income, and will need access to ADA-accessible dwellings within communities that can support their needs as they age—none of which our current housing stock can accommodate on the scale that’s needed.
How Can PMCs Attract & Retain Older Renters?
So, what can property managers do to adapt their rentals’ offerings for older residents?
- When you’re creating your listings, be sure to make note of any accessibility features in the property, which is a smart move in general because, of course, people can have mobility issues at any age.
- When you’re considering which investments to make in your property, focus most on updates that can improve residents’ quality of life in their units, like air conditioning, new appliances, and upkeep of the property.
- When it comes to services, think of how you might make living in your properties more convenient and comfortable for residents who are older or can’t get around as easily.
- For long-term renters, think about offering an incentive to continue renewing their lease, which can make them feel noticed and appreciated—for example, a small discount on one month’s rent each year.
Shifts in Renter Demographics That PMCs Will Notice in the Long Term
The three demographics we’ve just talked about are those that are growing right now, and that we expect to continue to grow into the near-term future. But there are some demographic changes that we might not be feeling just yet, but can expect to see a decade from now.
Slowing Population Growth
There’s one big change that’s hard to imagine based on current conditions, but that we’ll begin to feel by the end of the next decade: Population growth is happening at a slower pace than at any time in the last hundred years, and is also happening at a slower pace than demographers expected it to.
Population growth stayed relatively steady up until 2017, when it started to fall; and then it plummeted starting in 2021 to levels lower than any time in the previous century. 2022 looked a little better than 2021, but not remarkably so.
Why is this the case? Fewer people are moving to the U.S., and when the difference between births and deaths starts to narrow, as it did during the pandemic, it results in less renter household growth.
Low Moving Rates
We’re also reaching historic lows in the number of Americans who move each year. In the 1940s through the ‘60s, about 20% of the population would move every year, in comparison with just 8% today. Between now and then, five major things have changed:
- Our population has gotten older, and the older people get, the less likely they are to move from year to year (though younger people are also moving less now).
- There are also more homeowners now than there were then, though the homeownership rate has fallen a bit from where it was a few years ago due to the affordability challenges we mentioned. Homeowners stay in place longer than renters (though again, we’re also seeing renters move less often).
- There are more dual-earner households today, meaning households where both partners work—making it more difficult for a family to move across the country for one person’s job.
- On a national level, there are fewer differences between job markets in different places, meaning that there are similar opportunities available regardless of workers’ location.
- There’s the reality that rents on new leases have gotten significantly more expensive, and that there are a lot of costs associated with moving to a new place that motivate people to stay put if they can.
How Does Slowing Growth Look Across the U.S.?
We’ve seen headlines over the last few years about moves from one region to another during the pandemic. Though we’ve seen an overall decline in moves in recent years, there was an uptick in moves between regions during the pandemic:
- We saw the South gain the most residents from other parts of the U.S., particularly Texas and Florida, growing at a rate of 1.1% between 2021 and 2022.
- We saw a little bit of growth in the West due to births (0.2%), though California is actively losing residents.
- We saw the population of the Northeast shrink by 0.4%, especially New York.
- The Midwest is also losing residents to other regions at a slower pace (0.1%), particularly Illinois.
What Do These Shifts in Renter Demographics Mean for PMCs?
In review: We’ve talked about the rise of family renters, single-family and suburban renters, and older renters in the short term; and a slowdown in population growth and moving in the long term. Next, we’ll sum up what this means for property managers and their offerings going forward.
First: What we know is that properties that are accessible and appealing to a majority of renters will always outperform those that are only affordable to a limited population. Small rental properties—which tend to be owned and managed by small businesses—have the space to adapt to families’ evolving needs over time, and tend to be more affordable than properties targeted at high-income renters by choice, positioning them well against the changes we expect to see over the next decade.
Second: The slowdown in population growth means there will be more competition for a smaller pool of renters, and these renters will be more diverse than ever before. As a result, property management companies will have to exert even more effort to attract and retain great renters. But they’ll do so with the help of small businesses’ superpower: personalized customer service.
How to Adapt Your Customer Service Strategy for the Future
Look for patterns in who’s interested in your rentals and who stays put from year to year. Ask yourself whether you’re having more success with some demographics over others, and how you can better meet a wide range of needs—for example, maybe older renters stay put in your properties for years at a time, but families tend to move out after just a year or two. That would be a great sign that your properties could be more family-friendly.
Survey residents at key points in their journey and ask what’s working and what’s not. So many renters in our survey told us they would love it if someone asked how their rental experience has been so far, and if there are any areas where you can better meet their needs. So, don’t be afraid to just ask, and show that you’re taking their opinions seriously, even though you likely won’t have the resources to implement every piece of feedback you receive.
Research on How to Retain Renters of All Demographics
In mid-2023, our survey of renters found that 24% plan to move out of their current rental by the mid-point of 2024, and an additional 34% are on the fence about renewing their lease. How can property managers increase the number of renewals they see this year?
That’s the subject of our report, How Many Renters Plan to Move Out in 2023 & 2024? We dig into which factors most influence renters’ decision to stay or go, and how property managers can increase renters’ perception of value within their current property to improve their overall experience. Download your free copy (or listen to the audiobook) today.Read more on Industry Intel