Rethinking the American Dream: The Shift from Homeownership to Renting

Posted by

Greg Cooper J.D.


October 4, 2023

It has never been more expensive to buy a home. In the past three years, rapid house price appreciation combined with rising interest rates caused the monthly cost of homeownership to surge by 78.0%, averaging 21.2% annually. This rate significantly outpaces rent growth. By the second quarter of this year, the monthly cost of owning a new house became $1,298 more than renting a professionally managed apartment, hitting the highest buy-to-rent premium on record.

As homeownership becomes increasingly expensive relative to renting, one wonders if household dreams of ownership are shifting or if the appeal of renting is simply growing stronger. New data from the forthcoming 2024 NMHC/Grace Hill Renter Preferences Survey sheds light on these questions, providing insights into how apartment renters view homeownership and if the recent homeownership cost hike has led more renters to delay their homebuying plans.

This analysis is just a glimpse into the comprehensive 2024 NMHC/Grace Hill Renter Preferences Survey Report, which gathers insights from approximately 173,000 renters in institutional-grade properties. This vast survey captures data on various renter demographics, preferences on design features, operational processes, and more, both nationally and across 77 metro markets. The report will soon be available for purchase at

The media has often debated the true reasons people rent, particularly the concept of “renters by choice,” or those who actively choose to rent rather than buy. Our survey reveals that such a cohort does exist. In 2023, over 17% of apartment residents claimed no interest in homeownership, mirroring the 16.2% in 2021. Notably, these renters are predominantly older, with 56.4% over 54 and 38.8% aged 65 or more. Residents living solo, earning less, or having previously owned homes also leaned towards this sentiment.

For apartment dwellers expressing an intent to buy — termed “aspiring homebuyers” — the data delineates between active home seekers and those waiting for a better time. Given the dramatic increase in homeownership costs relative to renting over the past years, a dip in the number of eager homebuyers is expected. This projection aligns with findings showing a decrease from 20.5% in 2021 to 18.2% in 2023. However, further analysis reveals that other factors, like age and income, play a role in influencing this trend.

Exploring why some potential buyers are hesitating brings us to a core issue: the rising monthly costs of owning versus renting, known as the “buy-to-rent” premium. Metro areas with a higher buy-to-rent premium generally see fewer active aspiring homeowners. Similarly, regions with more expensive homes witness fewer active potential buyers.

When it comes to potential buyers, are they more influenced by the relative monthly costs or the large sum needed for a down payment? After considering variables like age, income, and living arrangements in 2023, we find that areas with higher average home values tend to have fewer active home seekers. Intriguingly, the monthly cost comparison between owning and renting didn't significantly sway buyer sentiment.

Several reasons can explain this. Some buyers might expect continuous home value appreciation, making them financially sound in the long run. Others might anticipate future rent hikes, favoring the predictability of fixed monthly home payments. Some potential buyers may also prioritize non-financial reasons, like customizing their living space.

Over the last two years, there's been a decline in the number of people actively seeking homes, correlating with a swift increase in house prices and interest rates. However, the exact reason for this drop isn't black and white. Our research indicates that aspirational homebuyers are generally more swayed by standalone house prices rather than monthly cost comparisons between owning and renting. They might be anticipating home price appreciation or future rent increments, deeming the purchase a future-proof decision.

The financial strain of housing, whether rented or owned, is intensifying for American households. There's been a significant rise in households burdened with housing costs. Efforts must double to not only build more housing but also renovate and maintain existing stock. This is pivotal in alleviating the financial strain felt by many and in addressing the challenges faced by the housing market today.


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