After the recession, renters—particularly Millennials—were flocking to urban areas, and as such, urban apartment construction surged to record-high levels. But now, a new study shows that’s changing. Renters are now targeting the suburbs in greater numbers.
Almost 10 years after the housing crisis, many people are asking themselves: “Where to live now?” During the post-recession rental boom, it appeared that millennial renters were flocking to urban cores. The trend was backed up by news of declining homeownership rates and urban apartment construction at record-high levels.
However, urban areas have not gained as many new renters as one might have expected. On the contrary, according to our most recent analysis of Census ACS data, during a 5-year period from 2011 through 2015, suburban areas were clearly outpacing urban areas in renter household gains in 19 out of 20 largest U.S. metros.
The suburbs of St. Louis, Atlanta, Riverside, and Boston gained 3 times more renters than their urban areas
The suburbs win not just in percentage increase of renter households, but also in net numbers. In the 20 metros studied, about 700,000 new suburban renter households were added in total during the 5-year period studied, while the total number of new urban renter households was 600,000 (or 100,000 less). Most notably, the suburbs of St. Louis, Atlanta, Riverside, and Boston drew three times as many new renter households as their urban areas.
The highest percentage increase was in the metro Atlanta region, where suburban areas gained 26% more renter households during the 5 years analyzed, while its main urban areas gained only 10% more. Also, in the Phoenix, AZ metro area there were 23% more suburban renters in 2015 than there were in 2011, while in its urban areas, renter households increased by only 14% during the same period of time. Likewise, in Riverside, CA metro, occupied rental units in the suburbs increased by 23% and urban occupied rental units increased by only 13%.
The only exception was metro Philadelphia, which remains a predominantly urban rental market.
At the metro level, the largest numbers of new renter households were recorded in suburban Riverside, CA (added a whopping 60,500 renter households vs only 18,000 added in the city), suburban Chicago (added 57,500 renter households vs only 37,000 in the city), suburban Miami (added 56,800 renter households vs only 27,000 in the city), suburban Dallas (added 52,600 renter households, but also 57,700 in the city), and suburban Atlanta (added 52,300 renter households vs only 15,100 in the city).
Cheaper rents among the main reasons driving new renters to the suburbs
As crowded urban areas are topping out in occupancy and prices, more renters are choosing the suburban life, with its nicely-landscaped, family-friendly, garden-style apartment communities. Some of the main reasons that people choose the suburbs are: schools are generally better, the communities are quieter, and rents are typically cheaper.
In fact, when we analyzed the average rents in the Yardi Matrix database in the 20 largest U.S. metros, we found that in 18 out of the 20 metros studied, renting in suburban areas is cheaper than renting in urban areas. An average of rent prices in suburbs vs cities in the 20 metros studied shows that renters save about a month worth of rent in one year if they rent in the suburbs (or about 11%).
Read the full article at: https://www.rentcafe.com/blog/rental-market/real-estate-news/suburbs-gaining-more-renters-than-cities/