Household Boom Fuels Record-High Rental Demand

The rental market is booming in the aftermath of the pandemic-driven Great Migration, which led to a surge in household formation and a steep increase in demand for rental housing. Renters leased 700,000 additional apartments last year, and that number only grew in the first quarter of 2022. After doubling the five-year average in 2021, renters leased twice as many apartments in Q1 2022 than in Q1 2021, John Burns Real Estate Consulting reports.

Not only are a growing number of Americans graduating college and moving away from home or decoupling from roommates to live alone, but a large share of existing renters are choosing to stay in place in a more expensive market. That excess demand is sending occupancy rates in apartments and other rental units to a record high.

A record 700,000 apartment units were leased-up in the 12 months through 1Q22, just in large apartment communities. That is more than double the nation’s historical norm for apartment demand. A surge in household formation is the driver behind this increase in absorption. Pent-up demand from college graduates who were still living at home through lockdown, roommates decoupling for more space, and just more people living alone all contribute to this increase in new households.

Read more