Surging Rents Push More Americans to Live With Roommates or Parents
Apartment demand in the third quarter was lowest of any quarter since 2009
4 min
After a long stretch of record-high rents, Americans are renting fewer apartments as demand in the third quarter fell to its lowest level in 13 years.
Some renters are choosing to take on roommates, while others are boarding with family or friends. More people are opting to stay longer in their parents’ homes or moving back in, rather than pay steep rent increases, according to a recent UBS survey.
Apartment demand in the quarter, measured by the one-year change in the occupancy of units, was the lowest since 2009, when the U.S. was feeling the effects of the subprime crisis, according to rental software company RealPage. Measured quarterly, the drop in demand was the worst of any third quarter—normally prime leasing season—in the more than 30 years RealPage has compiled the data.
Meanwhile, the apartment-vacancy rate rose to 5.5% in the third quarter, up from 5.1% the quarter prior, according to property data firm CoStar.
Rents have risen 25% over the past two years, according to rental website Apartment List, pushing many renters beyond what they can now afford. Meanwhile, inflation on other essential goods, such as food and energy, is also eating into how much people have left to spend on housing.
“It’s a signal that rent can’t continue at the same level it has sustained over the last couple of years,” said Michael Goldsmith, an analyst at UBS. “We’ve reached a point where renters are maybe willing to pull out of the market.”
The apartment rental market looks to be cooling following a boom that started in early 2021. After the introduction of a Covid-19 vaccine, many people—especially younger people who had been living with their parents—rushed to rent in cities around the country. That boosted apartment demand and put upward pressure on rents. Some rental apartments were even subject to bidding wars.
Record high housing prices also played a role. They priced out many Americans who wanted to buy starter homes but instead have remained captives of the rental market. Home prices are now falling on a monthly basis, however, according to the latest S&P CoreLogic Case-Shiller National Home Price Index.
Rental prices have started to fall on a monthly basis for the first time in nearly two years, too, while other recent data points also show that renters are starting to push back.
Shonda Austin, a home healthcare worker, and her three children moved into her mother’s house in Flint, Mich., this month after facing a 24% rent increase in Las Vegas. She hopes to return to a home of her own by March to somewhere more affordable, such as Arkansas or North Carolina, where she could potentially buy.
“My goal is to just save as much as I can,” Ms. Austin said.
The supply of new apartments, which has grown this year in large markets such as Phoenix and Dallas, may be contributing to the drop in overall demand, because new projects add empty units to a slowing market. Economic uncertainty rooted in fears of a recession may also be contributing to lower apartment demand.
Leasing also typically eases during colder months, but analysts said the drop in demand that started earlier this year is now greater than what was expected.
“The spring and summer leasing season was a total bust,” said Jay Lybik, national director of multifamily research at CoStar.
Yet even with the recent decline in demand, asking rents have remained near record highs. Nationally, asking rents have started to drop only slightly month-to-month, and are still up by 6% or more when viewed annually, according to several data sources. In some hot markets, they are up much more than that. In Charleston, S.C., rent is 14% higher than it was a year ago, according to Apartment List.
To escape record high prices, more people are choosing to live rent free with friends or family, a September UBS survey found. Eighteen percent of U.S. adults surveyed said they had lived rent free with other people during the last six months, up from 11% at the same time one year ago. That was the highest share of adults living rent free with friends and family since UBS began asking the question in 2015.
Other renters are finding roommates or splitting rent with family members. In North Charleston, S.C., 27-year-old bartender Bailey Byrum said her younger sister moved in with her at her two-bedroom rental house. Ms. Byrum said her sister had trouble finding her own place and had recently been living with her parents.
“She has a good job… but places by yourself are like $500 to $600 out of her budget,” Ms. Byrum said.
Some landlords are encountering resistance to steeper rent increases. In downtown Birmingham, Ala., last year, Kim McCann and her husband leased a spacious loft apartment for $2,800, a rent that then already seemed overpriced, Ms. McCann said. This July the landlord texted Ms. McCann to say she would be raising the rent by an extra $900 a month because local real-estate demand had “exploded.”
Rather than pay $3,700 for the same apartment, Ms. McCann and her husband decided to move out in August. The loft sat on the market until at least this week, according to a listing on Zillow, and the asking price was cut twice.
“Fingers crossed other landlords come to their senses soon,” Ms. McCann said.
Corrections & Amplifications
In 1Q 2022, change in demand was at its highest since 4Q 2021. A graphic in an earlier version of this article incorrectly said the quarter’s change in demand was at its highest since 2001. (Corrected on Oct. 25)
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Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
New research tackles the source of financial conflict and what we can do about it
3 min
When couples argue over money, the real source of the conflict usually isn’t on their bank statement.
Financial disagreements tend to be stand-ins for deeper issues in our relationships, researchers and couples counsellors said, since the way we use money is a reflection of our values, character and beliefs. Persistent fights over spending and saving often doom romantic partnerships: Even if you fix the money problem, the underlying issues remain.
To understand what the fights are really about, new research from social scientists at Carleton University in Ottawa began with a unique data set: more than 1,000 posts culled from a relationship forum on the social-media platform Reddit. Money was a major thread in the posts, which largely broke down into complaints about one-sided decision-making, uneven contributions, a lack of shared values and perceived unfairness or irresponsibility.
By analysing and categorising the candid messages, then interviewing hundreds of couples, the researchers said they have isolated some of the recurring patterns behind financial conflicts.
The research found that when partners disagree about mundane expenses, such as grocery bills and shop receipts, they tend to have better relationships. Fights about fair contributions to household finances and perceived financial irresponsibility are particularly detrimental, however.
While there is no cure-all to resolve the disputes, the antidote in many cases is to talk about money more, not less, said Johanna Peetz, a professor of psychology at Carleton who co-authored the study.
“You should discuss finances more in relationships, because then small things won’t escalate into bigger problems,” she said.
A partner might insist on taking a vacation the other can’t afford. Another married couple might want to separate their previously combined finances. Couples might also realize they no longer share values they originally brought to the relationship.
Recognise patterns
Differentiating between your own viewpoint on the money fight from that of your partner is no easy feat, said Thomas Faupl, a marriage and family psychotherapist in San Francisco. Where one person sees an easily solvable problem—overspending on groceries—the other might see an irrevocable rift in the relationship.
Faupl, who specialises in helping couples work through financial difficulties, said many partners succeed in finding common ground that can keep them connected amid heated discussions. Identifying recurring themes in the most frequent conflicts also helps.
“There is something very visceral about money, and for a lot of people, it has to do with security and power,” he said. “There’s permutations on the theme, and that could be around responsibility, it could be around control, it could be around power, it could be around fairness.”
Barbara Krenzer and John Stone first began their relationship more than three decades ago. Early on in their conversations, the Syracuse, N.Y.-based couple opened up about what they both felt to be most important in life: spending quality time with family and investing in lifelong memories.
“We didn’t buy into the big lifestyle,” Krenzer said. “Time is so important and we both valued that.”
For Krenzer and Stone, committing to that shared value meant making sacrifices. Krenzer, a physician, reduced her work hours while raising their three children. Stone trained as an attorney, but once Krenzer went back to full-time work, he looked for a job that let him spend the mornings with the children.
“Compromise: That’s a word they don’t say enough with marriage,” Krenzer said. “You have to get beyond the love and say, ‘Do I want to compromise for them and find that middle ground?’”
Money talks
Talking about numbers behind a behaviour can help bring a couple out of a fight and back to earth, Faupl said. One partner might rue the other’s tightfistedness, but a discussion of the numbers reveals the supposed tightwad is diligently saving money for the couple’s shared future.
“I get under the hood with people so we can get black-and-white numbers on the table,” he said. “Are these conversations accurate, or are they somehow emotionally based?”
Couples might follow tenets of good financial management and build wealth together, but conflict is bound to arise if one partner feels the other isn’t honouring that shared commitment, Faupl said.
“If your partner helps with your savings goals, then that feels instrumental to your own goals, and that is a powerful drive for feeling close to the partner and valuing that relationship,” he said.
A sense of mission
When it comes to sticking out the hard times, “sharing values is important, even more so than sharing personality traits,” Peetz said. In her own research, Peetz found that romantic partners who disagreed about shared values could one day split up as a result.
“That is the crux of the conflict often: They each have a different definition,” she said of themes such as fairness and responsibility.
And sometimes, it is worth it to really dig into the potentially difficult conversations around big money decisions. When things are working well, coming together to achieve these common goals—such as saving for your own retirement or preparing for your children’s financial future—will create intimacy, not money strife.
“That is a powerful drive for feeling close to the partner and valuing that relationship,” she said.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
