The past few years have brought significant shifts in affordability in the United States. Whether it’s evident in rising grocery bills or adjustments to what qualifies as a necessity, these changes have rippled through the housing sector.
According to data from the U.S. Census Bureau, by 2024, the cost-of-living ratio to overall expenses surpassed 31 percent — the highest since 2014. Historically, a housing burden ratio below 30 percent indicates a stable market. However, the increasing costs of housing — including rent, mortgages, taxes, utilities and insurance — are straining both homeowners and renters alike.
Mortgage payments have surged by 90 percent since 2019, compared to a 23 percent increase in rents. These affordability dynamics drove a 1.9 percent rise in the number of renters between the second quarters of 2023 and 2024, according to a Redfin analysis of U.S. Census Bureau data. If these trends persist, three key shifts are likely to reshape the multifamily and affordable housing markets over the next decade.
1. Luxury Unit Demand and Absorption Will Increase
In 2024, Class A multifamily units, or luxury apartments, were absorbed at the highest rate among all unit classes. According to Census Bureau data pulled by the National Multifamily Housing Council (NMHC), this is largely due to supply. More than 75 percent of units delivered in 2024 were Class A.
However, this trend also reflects demographic changes. The average renter is currently 31 years old and approaching peak earning years, which are ages 34–56, as defined by the U.S. Bureau of Labor Statistics.
As renters transition into higher income brackets, many are expected to seek upgraded living environments with premium finishes, tech-integrated features and sought-after amenities that luxury apartments provide. Developers should act on this demand, particularly in markets with a high concentration of renters nearing or within their peak earning years. While the number of planned developments has slowed since 2023 and 2024 (which saw record deliveries of 474,000 and 518,000 units respectively), catering to this segment may drive higher lease-up rates and return on investments.
2. Increased Interest in Build-to-Rent (BTR) Communities
Shifting lifestyle trends are influencing renters’ housing preferences. As more individuals experience life milestones, such as marriage, having children or working remotely, they are increasingly drawn to the build-to-rent (BTR) model. Unlike traditional multifamily properties, BTR communities offer greater privacy, more spacious layouts and features such as home offices, dens, garages and private yards.
These developments are particularly appealing to renters expanding their families or seeking pet-friendly options. According to CBRE Research, BTR activity has surged, with a record 80,000 units under construction in 2023.
With ongoing barriers to homeownership, including rising mortgage rates and stricter lending criteria, BTR communities will likely serve as an attractive alternative for those seeking the benefits of a home without the financial burden of ownership.
3. Rentership Rates May Challenge Historical Norms
According to U.S. Census Bureau data, Rentership has steadily risen, comprising 34 percent of U.S. households in 2023. With a 1.9 percent annual growth rate — three times higher than the rate of homeownership — renter households could make up 40 percent of the market within the next decade.
This would mark an unprecedented shift in U.S. housing dynamics, potentially mirroring the rental-dominant models seen in Germany and Switzerland, where renter rates are 51 percent and 58 percent, respectively.
These changes are driven by heightened housing costs and restrictive lending practices, which create significant barriers to homeownership. If rentership continues to grow at this pace, developers and policymakers must adapt to address the evolving needs of a renter-majority market.
Looking Ahead: Government and Developer Interventions
If housing affordability remains above the 30 percent threshold, the trends outlined above will likely accelerate. To mitigate this crisis, greater government involvement at the local and state levels is essential.
Programs that promote affordable housing, such as tax abatements, ground leases and incentives for developers, could help alleviate the burden on both renters and homeowners. States like Texas, Maryland and Florida, as well as cities like Philadelphia, have already implemented policies to encourage affordable housing development.
By understanding these emerging trends and adapting strategies accordingly, developers, investors and policymakers can better navigate the complexities of the multifamily and affordable housing markets in the years to come.
— Chris Cordes is director of multifamily at Wayne, Pennsylvania-based PPR Capital Management.