The homes renters never want to leave: 3-bedroom houses for rent are the Goldilocks of housing

For this study, Point2Homes looked at the five-year changes in tenure for house renters in the 75 largest U.S. metros and divided them into four categories: Renters who move after less than 12 months are short-tenure renters; medium-tenure renters are those who spend one to four years in a house rental before moving; long-tenure renters are renters who spend five to nine years in a single-family home before moving; and very long-tenure house renters are those who spend more than 10 years in a house before moving. Point2Homes also analyzed tenure by number of bedrooms to discover the rentals where house renters spend the most time before moving.

House Renters Hold Onto a Home Longer Compared to Just 5 Years Ago

High cost of living, supply scarcity, growing home prices and high mortgage rates make it impossible—or at the very least extremely difficult—for renters to start saving for a down payment, thereby keeping them renting for longer.

But it's not just increasing home prices that are keeping renters put. Rental prices have also shot up in recent years, discouraging renters from moving, as that would require taking on a likely higher lease.

That's obvious in the nation's 75 largest metros: Throughout the past five years, the share of renters who move after less than 12 months decreased in all but four metros. What's more, three metros are posting double-digit drops in the shares of short-tenure renters: In Bakersfield, California (-12.4%); Tucson, Arizona (-10%); and Omaha, Nebraska (-10%), renters really seem to be rethinking their strategy and are staying put.

This trend works like a seesaw: If the number of renters who move after less than a year is dropping, then long-term renters are on the rise. That's because renters who don't keep moving and don't become homeowners inevitably become long-term renters (renters who spend five to nine years in a house for rent before moving) and/or very long-term renters (renters who live in a house rental for 10+ years). 

To that point, there are several metros where the share of long-term renters is clearly going up: With an increase of 7.2%, Riverside, California, assumes the leading position. Renters in this metro are choosing to spend five to nine years in the same house rental before they up and leave.

In seven more metros, the number of long-term renters (renters who move after five to nine years) increased by more than 5%. This could be due to two stronger factors shaping renters' real estate decisions.

First, in metros like Las Vegas; Bakersfield, California; Sacramento, California; or Boise, Idaho, rent has gone up, making renters more reluctant to move for just any reason. Second, the supply of build-to-rent single-family homes has also increased, which means renters who want to expand their family or simply want more space no longer need to buy a bigger home, when they have access to or are already living in a single-family home for rent.

The same goes for very long-term renters (those who spend more than 10 years in the same house rental before trying to find another one). Oxnard, California, (+7.6%) and New Orleans, (+7.2%) lead the way with the biggest increases in shares of long-term renters. In six other metros, that share increased by more than 5%.

While the good news is that long-term renters get to save on many costs (including sharper rent hikes and moving costs), having to cover the rent itself is one of the bigger obstacles that renters face on the path to more significant savings.

Zooming in on the 15 largest metros, the data shows that the shares of renters who move after less than one year dropped the most in Detroit, (-7.6%) and Riverside, California (-7.5%).

But, no matter the city, whether we're looking at Detroit and Riverside, California, which saw the biggest drops, or Boston and San Francisco, two metros where short-tenure renters also decreased but not by as much, the reasons are the same. Yes, buying a home is hard, but so is finding a new rental, signing a new lease, covering all the moving costs and actually moving. For this reason, renters are increasingly preferring to stay within a comfort zone where they've become accustomed to the community, the amenities and the day-to-day routine.

In four other large metros (Allentown-Bethlehem-Easton, Pennsylvania-New Jersey; Birmingham-Hoover, Alabama; Hartford-West Hartford-East Hartford, Connecticut; and Boise, Idaho), both the shares of renters who move after less than 12 months and the shares of very long-term renters dropped, with the "displaced" renters leaving the extremes for the middle ground of rental tenure.

There are very few exceptions to the longer tenure trend. In four of the 75 largest metros (New Haven-Milford, Connecticut; Albany-Schenectady-Troy, New York; Rochester, New York; and Knoxville, Tennessee) the share of renters who move after less than a year indeed dropped, but they became more evenly distributed among the other tenure categories, leaving the long-term tenure category virtually unchanged.

If Gen Z renters, young, single Millennials and downsizing Baby Boomers can make do with smaller homes, they're not the majority. Most renters of single-family homes prefer the larger, three-bedroom houses for rent: Nearly half (47%) of all house renters opted for a roomy three-bedroom, whereas less than 10% went for a one-bedroom house for rent.

Net numbers are equally telling: Nearly 7 million renters live in three-bedroom houses, followed at a distance by the 4 million who choose a two-bedroom rental.

That's because single-family homes for rent cater to a very specific demographic—renters who are kept on the sidelines, unable to buy a home big enough for their changing needs.

The trend holds for the 15 largest U.S. metros, as well, with all of them boasting the largest numbers of renters opting for this type of single-family home for rent. Los Angeles has the largest number of three-bedroom home renters, followed by Dallas and Philadelphia.

Of course, the most populous cities were the ones that experienced the greatest exodus of people who decided to abandon busy hubs in favor of suburbs, smaller cities and towns and even rural areas during and after the pandemic. That's why, aside from family formation, remote work could also be a big driver when it comes to demand for larger homes.

And, according to research published earlier this year by John Burns Research and Consulting, remote work lives on: "Despite return-to-office policies, remote work remains about four times more prevalent than pre-COVID. […] the resulting outflow to more outlying areas is akin to the massive shifts caused by the car revolution of the 1950s and 1960s that opened up the first ring of suburbia."

By analyzing different demographics trends and how they influence housing, researchers concluded that the lack of supply and increasing demand resulting from family formation and remote work could lead to the further development of the for-rent sector.

Owing mostly to renters' inability to get on the property ladder, the preference for spacious, three-bedroom houses for rent is due to the post-pandemic shift in remote work trends. No matter where they live, renters need larger homes to be able to work—and are becoming increasingly willing to rent them if buying is out of reach.

Methodology

Part of Yardi Systems, Point2Homes covers housing trends and news through comprehensive studies that draw from internal data, public records, governmental sources, and online research.

• For this study Point2Homes analyzed the number of single-family renter households based on their tenure and number of bedrooms in 2022 and 2017 using IPUMS' five-year estimates for the 75 most populous U.S. metros.
• IPUMS is the Integrated Public Use Microdata Series and provides census and survey data from around the world integrated across time and space. IPUMS is a part of the Institute for Social Research and Data Innovation at the University of Minnesota.