Surging Rents Push More Americans to Live With Roommates or Parents

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)

As Paris makes its final preparations for the Olympic games, its residents are busy with their own—packing their suitcases, confirming their reservations, and getting out of town.

Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country. Hotels and holiday rentals in some of France’s most popular vacation destinations—from the French Riviera in the south to the beaches of Normandy in the north—say they are expecting massive crowds this year in advance of the Olympics. The games will run from July 26-Aug. 1.

“It’s already a major holiday season for us, and beyond that, we have the Olympics,” says Stéphane Personeni, general manager of the Lily of the Valley hotel in Saint Tropez. “People began booking early this year.”

Personeni’s hotel typically has no issues filling its rooms each summer—by May of each year, the luxury hotel typically finds itself completely booked out for the months of July and August. But this year, the 53-room hotel began filling up for summer reservations in February.

“We told our regular guests that everything—hotels, apartments, villas—are going to be hard to find this summer,” Personeni says. His neighbours around Saint Tropez say they’re similarly booked up.

As of March, the online marketplace Gens de Confiance (“Trusted People”), saw a 50% increase in reservations from Parisians seeking vacation rentals outside the capital during the Olympics.

Already, August is a popular vacation time for the French. With a minimum of five weeks of vacation mandated by law, many decide to take the entire month off, renting out villas in beachside destinations for longer periods.

But beyond the typical August travel, the Olympics are having a real impact, says Bertille Marchal, a spokesperson for Gens de Confiance.

“We’ve seen nearly three times more reservations for the dates of the Olympics than the following two weeks,” Marchal says. “The increase is definitely linked to the Olympic Games.”

Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country.
Getty Images

According to the site, the most sought-out vacation destinations are Morbihan and Loire-Atlantique, a seaside region in the northwest; le Var, a coastal area within the southeast of France along the Côte d’Azur; and the island of Corsica in the Mediterranean.

Meanwhile, the Olympics haven’t necessarily been a boon to foreign tourism in the country. Many tourists who might have otherwise come to France are avoiding it this year in favour of other European capitals. In Paris, demand for stays at high-end hotels has collapsed, with bookings down 50% in July compared to last year, according to UMIH Prestige, which represents hotels charging at least €800 ($865) a night for rooms.

Earlier this year, high-end restaurants and concierges said the Olympics might even be an opportunity to score a hard-get-seat at the city’s fine dining.

In the Occitanie region in southwest France, the overall number of reservations this summer hasn’t changed much from last year, says Vincent Gare, president of the regional tourism committee there.

“But looking further at the numbers, we do see an increase in the clientele coming from the Paris region,” Gare told Le Figaro, noting that the increase in reservations has fallen directly on the dates of the Olympic games.

Michel Barré, a retiree living in Paris’s Le Marais neighbourhood, is one of those opting for the beach rather than the opening ceremony. In January, he booked a stay in Normandy for two weeks.

“Even though it’s a major European capital, Paris is still a small city—it’s a massive effort to host all of these events,” Barré says. “The Olympics are going to be a mess.”

More than anything, he just wants some calm after an event-filled summer in Paris, which just before the Olympics experienced the drama of a snap election called by Macron.

“It’s been a hectic summer here,” he says.

Hotels and holiday rentals in some of France’s most popular vacation destinations say they are expecting massive crowds this year in advance of the Olympics.
AFP via Getty Images

Parisians—Barré included—feel that the city, by over-catering to its tourists, is driving out many residents.

Parts of the Seine—usually one of the most popular summertime hangout spots —have been closed off for weeks as the city installs bleachers and Olympics signage. In certain neighbourhoods, residents will need to scan a QR code with police to access their own apartments. And from the Olympics to Sept. 8, Paris is nearly doubling the price of transit tickets from €2.15 to €4 per ride.

The city’s clear willingness to capitalise on its tourists has motivated some residents to do the same. In March, the number of active Airbnb listings in Paris reached an all-time high as hosts rushed to list their apartments. Listings grew 40% from the same time last year, according to the company.

With their regular clients taking off, Parisian restaurants and merchants are complaining that business is down.

“Are there any Parisians left in Paris?” Alaine Fontaine, president of the restaurant industry association, told the radio station Franceinfo on Sunday. “For the last three weeks, there haven’t been any here.”

Still, for all the talk of those leaving, there are plenty who have decided to stick around.

Jay Swanson, an American expat and YouTuber, can’t imagine leaving during the Olympics—he secured his tickets to see ping pong and volleyball last year. He’s also less concerned about the crowds and road closures than others, having just put together a series of videos explaining how to navigate Paris during the games.

“It’s been 100 years since the Games came to Paris; when else will we get a chance to host the world like this?” Swanson says. “So many Parisians are leaving and tourism is down, so not only will it be quiet but the only people left will be here for a party.”

Surging Rents Push More Americans to Live With Roommates or Parents

Apartment demand in the third quarter was lowest of any quarter since 2009