Several demographic trends, including a pool of young adults ready to move into rental housing, aging baby boomers and transitions in migration patterns, bode well for increased demand for rental housing in 2026 and the years ahead, according to Eric Finnigan, vice president, demographics research for John Burns Research and Consulting (JBREC), a real estate research and consulting firm.
Finnigan presented data about the surge in rental households compared to homeowner households at the JBREC “U.S. Demographics Insights and Strategies for 2026 and Beyond” webinar on September 24, 2025. In addition, he identified markets where renter demand is likely to rise and discussed the impact of other trends such as remote work and an immigration slowdown on the housing market.
“The immigration surge has ended, with our forecast for immigration down 75% in 2025 compared to 2024, but according to our mid-September 2025 survey, builders are not experiencing a labor shortage,” Finnigan said. “Legal immigration continues at a relatively steady pace, which supports demand for rental housing and multigenerational homes. Nearly half of immigration visas go to spouses, parents or children of U.S. citizens or green card holders.”
Migration Patterns to Watch
Despite recurring announcements of return to office policies, a significant percentage of workers continue to work at home at least part time, according to Finnigan, which means that they are more willing to move farther from job centers in search of affordable housing. Workers in the financial, information, tech and arts and entertainment sectors work at home an average of 1.9 to 2.2 days per work, according to JBREC research.
JBREC’s research found other demographic patterns with housing implications, including:
- Strong net migration persists in some markets. For example, despite fewer households moving in general in Nashville, the metro area continues to experience strong in-migration that generates housing demand.
- Some hot markets are cooling. For example, net migration in Fort Worth declined, according to JBREC’s most recent data in June 2025.
- Positive migration swings negatively in some markets. Tampa lost population in June, possibly because of concerns about flooding and hurricane damage, according to Finnigan.
- Negative migration swings positively in other markets. After losing population in 2024, the Riverside-San Bernadino area near Los Angeles gained population, likely because of its relative affordability compared to coastal Southern California.
- Some smaller markets are boosted by migration from higher priced markets nearby. Multiple metro areas are benefiting from in-migration among people looking for lower cost housing. For example, San Antonio and Killeen have seen recent population growth from people from Austin. Similarly, Greeley and Colorado Springs are seeing new residents moving from Denver, and Ogden, Utah’s population is growing from residents leaving Salt Lake City. Orlando, which is experiencing negative migration, is losing population to the Carolinas as well as nearby Florida cities such as Lakeland, Daytona Beach, Ocala and Palm Bay. People are also leaving the Bay Area for more affordable California locations such as Sacramento, Stockton and Vallejo.
Homeownership Draw Weakens
First-time homebuyer demographics shifted in recent years, with the average age of first-time buyers hitting 38 in 2024, seven years older than the average age before the pandemic, according to Finnigan. A major reason is the increasingly high cost of homebuying, particularly when compared to renting.
“The monthly payment for the average starter home in 2025 is $3,544,” Finnigan said. “A renter moving from an equivalent single-family home would pay 38% more than their average rental payment. Someone moving from an apartment to that starter home would pay an average of 93% more per month.”
That calculation is one reason why multifamily owners are seeing historically low rates of renters moving out to buy homes, according to Finnigan. He said Camden reported an average of 10% of their residents moved out to buy homes from 2023 to mid-2025, compared to a historical average of 14%. Equity Residential reported just 7.2% of their renters moved to buy a home in the second quarter of 2025, the lowest level the company has seen.
Renter Demand and Household Formations
JBREC’s researchers estimated total occupancy rates at 93.8% in June, but stabilized properties had an occupancy rate of 94.3%, demonstrating the impact of higher new supply on the multifamily sector. In addition, the weaker job market, particularly for recent college graduates likely to rent an apartment, has slowed new household growth, Finnigan said.
“Young adults are more likely to be living with their parents than renting an apartment than in the past,” Finnigan said. “Currently, 17.6% of young adults age 25 to 34 are living with their parents or grandparents compared to the average of 13.6% between 1997 and 2025. 680,000 more young adults are living with their parents today than in 2023.”
Many young adults who are renting a home live with roommates, which also delays new household formations, according to Finnigan.
“Existing renters tend to stay longer in their apartments than in the past, but we’re also seeing a growing reserve of future renters waiting to move out of their parents’ home,” Finnigan said. “Another source of renter demand in the coming years is that with the oldest baby boomer now 79, we’re beginning to see the shift in that population of moving into rental homes, multigenerational homes or group homes such as senior living properties.”
Finnigan’s recommendation to developers is to watch migration trends closely since people are moving less. In addition, he suggests planning with long-term demographics in mind, particularly for aging baby boomers and their housing needs, as well as the shrinking population of people currently under 20.
“Developers should consider the needs of renters who want the benefit of ownership but don’t have the budget,” Finnigan said.
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.