Property managers and landlords nationwide aim to attract reliable, long-term tenants. Gaining insight into modern renters—their tenant data, financial situations, lifestyle choices, and key priorities—gives proactive property owners and managers a competitive edge in appealing to the ideal tenant. While certain elements of the rental landscape are not within the control of market professionals, knowledge is power, and understanding the preferences, spending habits, and profiles of today’s renters can inform their business approach and success.
To understand today’s renter, Experian® took a deep dive into the tenant data of the rental market landscape in its 2024 report on the U.S. rental market. Among the principal findings, Generation Z and younger millennials’ dominance in this sector is rising.
Today’s Renter Profile
Experian research reveals movements in the demographics of the average U.S. renter, now dominated by younger individuals and lower average-income consumers. These renters face challenges as they navigate the rising costs of securing housing. The 2024 rental report delves into these changes, highlighting age and income level shifts in tenant data. Critical to property managers and landlords, this information offers an understanding of their customer base and provides insight into the rental market landscape.
- Gen Z on the Rise: Gen Z alone accounts for 30.5% of all renters, and their numbers are increasing, up 3.5% over a year. Gen Z and younger millennials (adults under 35) represent over 50% of the rental population.
- Income Declines: From January 2023 to January 2024, the tenant data showed the average income of RentBureau® renters fell from $53,100 to $52,600[1].
- Higher Rent Costs: In 2024, over 50% of renters paid $1,500+ per month, with the average U.S. renter’s monthly payment of $1,713. Gen Z,the youngest renter population, spends an average of $1,600 monthly on rent.
This context plays an important role in examining the state of the 2024 rental market.
Propensity to Move
In addition to age and economic well-being, landlords should take a keen interest in tenant data related to renters’ moving habits, as these provide valuable insights into behavior and market trends. Landlords generally prefer longer-term leaseholders, and renters who stay longer provide more stability to property management efforts.
Not surprisingly, generational trends appear here as well. While over 90% of all renters retained one lease over a 2-year period, tenant data indicates that Gen Z and younger millennial renters tend to move more than other age groups.
This tendency stems from various factors, including a willingness to relocate to more affordable regions or areas that better suit their lifestyle preferences. With today’s evolving work environment, remote work has opened new possibilities. Again, the overarching trend is that renters stay in one place for two years. In fact, this represents 92.5% of all renters.
Signs of Overall Renter Financial Health
Housing is a significant monthly cost of living expense, especially for many younger adults just starting out and lower-income individuals and families.
The percentage of a renter’s monthly income allocated to rental costs clearly indicates housing affordability. This tenant data reflects that higher rent-to-income ratios (RTIs) signify that renters have less financial flexibility, as a larger portion of their monthly income is allocated to rent, leaving less available for essentials, savings, and discretionary spending.
On average, renters spend over 44% of their monthly income on rent, and low-to-moderate-income renters dedicate over 50% to rent. General guidelines suggest that the percentage should be no more than 30%.
Higher rental costs and declining annual incomes disproportionately impact those with fewer financial means.
Credit and Other Signs
Landlords and property managers value tenant data, such as renter applicants’ stability. Indicators such as overall credit quality and negative payment history provide valuable insights into economic well-being. While negative payment history has improved slightly, the market shows a rise in delinquencies.
Experian’s research highlights that while credit scores for the general U.S. population are on the rise, the trends for renters tell a slightly different story. Between May 2023 and May 2024, tenant data revealed a 2% increase in renters fell into the near-prime and subprime credit categories. Although the implications for the future remain uncertain, this data, combined with other analytics, may offer clues about market trends and opportunities.
The Future
The demand for rentals remains high, particularly among young adults and lower-income households. As the economy and market forces fluctuate, so do the financial pressures on renters and rental housing availability and costs. The role of young adults and lower-income households in the rental market will continue. Landlords and property managers must tune in to demographic realities in their efforts to develop risk management and success strategies.
To learn more about the state of the U.S. rental market, download Experian’s 2024 rental report.
[1] RentBureau income is based on modeled income, which is estimated using credit data and other predictive factors.
