Rentals are taking off in the suburbs as homeownership remains out of reach for many buyers.
Between 2018 and 2023, renters jumped at least 5 percentage points in 11 suburbs of the largest U.S. metropolitan areas, according to a recent analysis by rental market research firm Point2homes.
During the same period, 15 suburbs were made up primarily of homeowners before becoming a majority community. This trend spans rapidly growing Sun Belt Metro, such as Dallas, Houston and Miami, and northeastern cities such as Boston and Philadelphia.
In five of five metro areas: Dallas, Minneapolis, Boston, Tampa and Baltimore, suburbs are gaining tenants faster than the city centres they surround. The proportion of residents in the Dallas suburbs, which increased 17.6% between 2018 and 2023, rose just 7.9% in the city itself.
In 2018, it was more difficult to buy homes with most of the city in the city than more suburban counties in the Metro area, such as suburbs such as Frisco, McKinney and Gran Prairie. The NBC News Home Buyer index shows that home buying is now more difficult in suburban counties surrounding Dallas than Dallas County.
Housing affordability is a national issue spanning cities and suburban areas.
Since the pandemic, mortgage costs have risen sharply, priced many future buyers in areas of demand of all kinds. Currently, the level not seen before the 2008 financial crisis is below 7%, and the average interest rate for popular fixed mortgages for 30 years is currently considered to be below 7%. In this tough market, some housing experts say the surge in rental properties has helped people who otherwise could not afford them to access their suburban lifestyles.
N. Edward Coulson, professor at the University of California, Irvine University and director of the Real Estate Center, said: “They get all that amenities from having a detached house.”
The suburban mark, just outside Chicago, said he asked him to be identified by his name to avoid professional blowbacks to get heavy on hot button housing issues. He estimates that many comparable properties in the area are 30% more in monthly home payments than current rent, and is considering leaving the area so that they can buy other locations.
“If you want to stay here, it basically doesn’t last,” Mark said.
Andrew Decker, a tenant in Lake Villa, Illinois, said midway through Chicago and Milwaukee that he and his family had said they wanted to buy the place they now live.
“If we can afford it, we want to keep it home forever, but it’s very expensive,” Decker said. “If they came to me and said, ‘Hey, I can buy this house for 200 Grands today,’ they’d pull the trigger tomorrow.
Tara Raguver, who runs the Tenant Union Federation of tenant advocacy groups, said the issue of affordability that has driven the suburban rental boom threatens to push people up far from the city’s core.
“When people move out of the city, they may be far from transport and they may be far from employment. They may live in a home that is not necessarily connected to other people like them.
However, the landlord said, “We are promoting the benefits you can get from renting at Barb.
“The ability to make one payment that generally covers all costs — you don’t have to deal with mortgage payments, home insurance, maybe HOA, and many maintenance costs, so it’s valuable to many people.”
The developers are also building different types of properties for suburban tenants, including multi-family complexes. Residential economist and host of The Rent Roll podcast Jay Parsons points to the rise of “downtown suburban.” The development of these mixed use is usually aimed at providing young families with a balance between urban convenience and suburban amenities, he said.
“You can still get closer to work. You can be close to nice restaurants and shops, but you still live in a suburban area where you’re still using your car. You probably have more affordable rent than most downtown residents,” Parsons said.
Coulson doesn’t expect the suburban charm to disappear anytime soon.
“If you’re working in Downtown, living in Downtown is still an advantage, but that’s not a huge advantage despite the ongoing drumbeats of obligation to return to the office, as remote work remains common as it used to be,” he said. “What it does is increase the cost of living in the suburbs, because now more people want to live in the suburbs.”
“It’s the dynamics that we have to solve ourselves a little more before we know what the ultimate impact on suburban and downtown pricing,” he said.