Population growth, job creation and wage increases are prime factors influencing household growth and migration patterns. For multifamily investors, tracking these changes can be key to making savvy decisions. While a slow economic growth pattern is anticipated to continue for the next several years, several factors indicate that the share of U.S. households that rent their homes is likely to grow, including homebuying affordability issues.
The Counselors of Real Estate®, a global organization of real estate advisors, brought together researchers Abby Rosenbaum, associate director for Oxford Economics, an independent advisory firm, and Chris Porter, senior vice president-research for John Burns Research and Consulting, for their September 16 webinar, “The People Factor: How Demographic Shifts Affect Real Estate.”
Rosenbaum forecasts 0.2% population growth in 2026 and 2027, far below the pre-pandemic growth rate of 0.7% annually. The modest population growth forecast stems from the decline in immigration as well as a 16% decline in birth rates over the past 18 years, according to Porter.
“U.S. net immigration is forecast to be 160,000 people annually for the next several years, which compares to 1.1 million people, the typical number for the past several years,” Rosenbaum said.
The fastest growing age cohorts are those who are 40 to 54 and 70 and older, according to Porter.
“We’re looking at a slower growth period going forward, whether it’s population or job growth, which also generally slows household growth,” Porter said. “In my opinion, rentership is going to capture a bigger share of that growth.”
While multifamily demand typically depends on younger people forming households, the definition of the “typical renter” is changing, Porter said.
“People are renting longer,” he said. “There’s an increasing tendency for the older population to rent, plus since people are renting longer, 70% of renters are now 30 years old or older.”
While some are renters because of affordability issues for homeownership, many others choose to rent for the lifestyle and flexibility, Porter said.
Senior housing returns have significantly outperformed other housing sectors for the past few quarters, Rosenbaum pointed out, an indication of the growing preference for renting among older people.
Shift to Suburbs Even with Delayed Homeownership
Population growth among aging millennials and older people bodes well for suburban demand, according to Porter. As millennials form families, they tend to have a preference for suburban locations, as do older people, he said.
“But younger people have different expectations for suburban housing,” Porter said. “They want urban conveniences, walkability and entertainment in suburban downtowns.”
Porter said that while build-to-rent single-family homes are the newest asset class in real estate, they offer a community feeling in a suburban location, new construction and amenities that are desirable for people with good incomes who want flexibility and are not ready to buy. Demand for both multifamily and single-family home rentals is likely to remain strong, particularly given forecasts for prices and mortgage rates to remain elevated.
“Homeownership is likely to remain unaffordable for at least the next 10 years,” Rosenbaum said.
In addition, the wealth transfer from people born in the 1950s and 1960s, who have $90 trillion in wealth, to their children and grandchildren, while a potential gamechanger for prospective buyers, is more likely to trickle into the economy unevenly rather than in a wave, Porter said. With people living longer, more of their wealth needs to be preserved for medical costs and other expenses.
Regional Growth Patterns
In general, the Sunbelt is anticipated to continue to be the highest growth region for population and jobs. While they’re seeing healthy growth, most major markets have population growth below pre-pandemic trends, according to Rosenbaum. In addition, growth rates are anticipated to be uneven.
“For example, Austin’s population saw high growth before and during the pandemic, and it matched its pre-pandemic growth rate in 2023 to 2025, but we’re not expecting to see that same level in the near term,” Rosenbaum said. “Generally, the Sunbelt is likely to continue to gain population.”
Household growth in the Sunbelt accelerated in 2021 and 2022, which may be contributing to slower growth now since the pandemic pulled people to move quickly, Porter said. People are generally not moving as much as during the pandemic. However, the lower cost of living and business friendly cultures that support job growth in many Sunbelt cities is expected to keep attracting domestic in-migration.
Certain metro areas, particularly those with a strong tech industry, a large university or a large government presence, are likely to benefit from AI investments, according to Rosenbaum.
Cities such as Los Angeles, San Diego, New York are losing population due to slower immigration, Porter said.
Housing prices remain strong in the Midwest and the Northeast primarily because of the lack of supply rather than job and population growth, but the lack of new construction is likely to keep real estate prices high in those locations. In turn, that can keep rental demand high in those locations.
The information provided in this article, including, without limitation, any opinions, predictions, forecasts, commentaries or suggestions, is for informational purposes only and should not be construed to be professional or personal investment, financial, legal, tax or other advice.