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Are Renter Roommates Doubling Up or Un-Doubling?

Comparison to Single-Renter Households

Wednesday, October 5, 2016

Approximately 43.7 million renter households existed in the U.S. in 2015 (the latest data available), according to the Census Bureau’s American Community Survey -- about 37% of all households. Of those, 20.7 million are “nonfamily” households which may contain only one person – the householder – or two or more unrelated people: In other words, roommates. 

In 2006, overall renter household formation – both family and non-family -- decreased as the housing boom began to peak. Total nonfamily households (both owner and renter) increased by an annual average of almost 8.0 million since 2007, and nonfamily renter households increased by an annual average of 333,000 in that time.

From the chart below, it is clear that single-renter households increased each year since 2006, while roommate renter households decreased in 2006 and increased each year after. The number of nonfamily householders with roommates has increased through 2015, but has leveled off at around 130,000 for the past two years. On average, almost 120,000 additional roommate-renter households and about 200,000 single-renter households were created each year since 2007.

The number of single-renter outpaced roommate-renter household creation in all but two of the past 10 years. However, single-renter household growth averaged 1.4% since 2007, while roommate-renter households averaged 2.9% in that period. In fact, the period of strongest roommate-renter household growth was in the Great Recession year of 2009, when they increased 4.8%. Another surge in roommate-renter household growth occurred in 2013, when home prices were spiking and job growth remained moderate. It appears that doubling and trebling of roommates is still popular.

Separating the roommate renter households by age group, we see an expected pattern of higher household formation for the prime renter age group of 15-34 year-olds (see following chart). In 2006, more than 180,000 fewer roommate-renter households headed by 15-34 year-olds existed in the run up to the housing bubble, as this age cohort increased its share of homeownership. As the effects of the housing bust and Great Recession took hold, more of these younger roommate-renter households were created each year, with a peak of more than 150,000 in 2009. 

Growth of 15-34 year-old roommate-renter households stalled in 2010 and 2011, but increased from 2012-2015 as the economy continued its moderate recovery. The job growth that has occurred in this recovery has been dominated by lower-paying jobs in retail trade and food services, forestalling strong growth in single renters living alone and pushing more young renters into roommate situations.

A couple of other points evident from the data:

  • The surge in roommate renter households in the 35-64-year-old group in 2010 are likely the former homeowners who lost homes to foreclosures, many of whom should not have qualified for mortgages in the first place.
  • Interestingly, roommate-renter households created by the 65 and older group have started to increase, averaging more than 15,000 new such households annually since 2011 -- 23,588 in 2015 alone.

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