For agents navigating and servicing the American housing market, acknowledging its profound evolution over recent decades is crucial. Today’s landscape is quite different from that of 50 or even just 10 years ago. One of the most notable shifts is the surge in home prices, reaching unprecedented and often out-of-reach levels.
Looking back to the 2005 and 2006 real estate peak, lofty home prices reached a then staggering-sounding high of $230,200 in July 2006. Fast forward to today, and the national average home price checks in at $417,700 as of the fourth quarter of last year, with California coming in more than double that at $843,000, according to data from the California Association of Realtors.
Trend: Renters are staying renters longer
This steep climb in single-family home prices has led to an undeniable trend: renters are staying renters longer. Or, they are going back to renting! While affordability remains a significant factor, individuals are increasingly opting to rent for reasons beyond mere necessity. Popular factors can include increased flexibility, less responsibilities, and a desire for a simpler lifestyle.
The rise of remote work, freeing individuals from the need to live in commutable distance to their workplaces, has further buoyed this shift. Moreover, the allure of sidestepping the burdens of homeownership maintenance has added weight to the inclination towards renting. This trend is surprisingly on the rise among empty nesters, some of whom prefer going back to renting over maintaining the often larger suburban homes they raised their families in and instead opting for the convenience of urban living.
Even among the affluent, there’s a growing preference for renting well-located properties over investing in potentially farther-flung single-family homes. In short, the focus is shifting further from homeownership as the sole hope of future financial stability to prioritizing convenience and a lifestyle centered on experience today.
Rental incomes skyrocket
Since 2010, the number of renters earning annual incomes in excess of $200,000 jumped four-fold, according to U.S. Census Bureau data. Such statistics underscore the evolving perception that renting can be a more permanent lifestyle choice rather than just a temporary necessity.
The rise in rental demand is underscored across a variety of channels, including on BrightMLS systems, where data in 2023 showed a 12.4% year-over-year increase to 70,829. BrightMLS services seven states and some of the nation’s most important and diverse housing markets, including Maryland, New Jersey, and Washington, D.C.
Yet, even for those still aiming for homeownership, agents should be aware of more unconventional paths gaining traction. A climbing number of those considering purchasing a house are looking into non-traditional approaches, such as co-purchasing homes with non-romantic partners—friends or co-workers—rather than spouses. In a recent survey by JW Surety Bonds, about 13% of respondents said they had engaged in such arrangements, with an additional 48% considering it. Gen Zers are particularly open to this trend, with 70% of that age group expressing willingness to purchase homes with non-romantic partners.
The advantages of co-purchasing considered as key by respondents included sharing the financial burden, accessing better housing options, and seizing investment opportunities. For 65% of respondents, a shared purchase represented a passive rental income opportunity, while 54% viewed it as a way to acquire a primary residence.
Given today’s housing market, coupled with inflation, a climbing interest rate environment and a general shortage of homes, agents must recognize change is afoot. Whether individuals are embracing renting as a longer-term lifestyle choice or exploring unconventional paths to homeownership, the overarching theme remains clear: today’s housing market reflects evolving socio-economic conditions and changing lifestyles that redefine the American dream. This fact calls for innovative solutions and flexible approaches to supporting individuals who are navigating the increasing complexities of contemporary living.
Michael Lucarelli is the CEO and co-founder of RentSpree.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Michael Lucarelli at [email protected]
To contact the editor responsible for this story:
Tracey Velt at [email protected]
