Homeownership continues to slip out of reach for the nation’s renter households. According to a new analysis from CBRE, approximately 1.8 million renter households can no longer afford a median-priced home due to high interest rates and elevated home prices, a trend that has accelerated over the past five-and-a-half years.
With more households unable to afford homeownership, CBRE predicts multifamily occupancy rates will remain higher than historical averages for years to come, putting upward pressure on near-term growth as supply and demand rebalances.
While the buying premium remains elevated over pre-pandemic levels in almost every U.S. market, that is slowly starting to fall. The national average buying premium as of the second quarter is at 108%, down from 128% at the end of 2023 but well above the pre-pandemic average of 68%.
Nationally, the average cost to own a home as of the second quarter is $4,643 a month, including the mortgage, insurance, taxes, and general maintenance—more than double the average monthly rent of $2,228.
The share of renters who can afford a median-priced home dropped significantly—from 17% in 2019 to 12.7% this year. According to CBRE, upfront costs are a barrier, with estimates that a 20% downpayment for the purchase of a home would cost the equivalent of four years of the average apartment rent.
“For many Americans, renting is the most financially viable and flexible housing option,” said Matt Vance, Americas head of multifamily research at CBRE. “Closing the affordability gap between renting and homeownership will require a combination of declining home prices, lower interest rates, rising incomes, and strong rent growth. This will take years to play out. In the meantime, we expect elevated multifamily occupancy rates to persist as the rental market continues to meet the demand for housing.”
Of the 69 markets tracked by CBRE, Boston and Washington, D.C., have the most renter households that can no longer afford a median-priced home, followed by other large markets like Los Angeles and Philadelphia. Sun Belt markets that experienced significant in-migration during COVID—Atlanta; Austin, Texas; Orlando and Tampa, Florida; and Phoenix—also have seen some of the biggest home price increases.