As homeownership declines, rental markets surge: What this means for owners & operators

There has been a structural shift in the way Americans look at housing in the last few years, and the rental market is growing to accommodate this change.

The homeownership market is expected to remain largely stagnant through 2025, with growth projected to stay below 3%. Demand remains historically low, and renting has become a more deliberate, long-term choice. Between affordability, generational lifestyle preferences and convenience, rentals are becoming the preferred housing of Americans of all ages across the country, rather than just a stepping stone to homeownership. However, this growth is not pure upside for landlords, who must adapt both their application process and their properties’ amenities to capture and appeal to a new, diverse range of renters.

In 2024, 70 million Americans (more than 36% of the U.S. workforce) engaged in freelance work, 51% of retirees downsized after retirement, and international student enrollment continued to rise. Many renters in these categories lack traditional income, credit history, or a U.S. co-signer, making it harder to meet standard screening criteria. We sat down with Charlie Shelly, VP of Sales at TheGuarantors, to hear how owner-operators are adapting to this new, and potentially lucrative, renter landscape.

More than simple economics

When it comes to renting versus owning a home, economic trends undoubtedly play the biggest role.

“Home prices and mortgage rates remaining high have pushed people away from home ownership into the rental market,” says Shelly. “Wage growth hasn’t kept up with home prices. Inflation and cost of living are also big drivers of individuals looking to spend their money elsewhere, rather than a big down payment on a new home.”

According to Redfin, mortgage payments are up 90% from before the pandemic, while asking rents are up 23%. This trend has diverse downstream effects on renters of different ages, from putting homeownership increasingly out of reach for younger generations to making renting more cost-effective for retirees looking to downsize.

But there’s more to rental market growth than simple price. While Millennials and Gen Zers certainly face economic barriers to home ownership, they tend to prefer the flexibility of renting, which allows them to follow job opportunities or chase experiences without being tied down to a specific geographical region.

On the other end of the demographic spectrum, the number of retirees choosing to rent is also growing.

“We’ve seen older generations downsizing to rentals,” says Shelly. “They want something that’s less maintenance and more convenient. So we’re seeing people on both the younger and older side trend toward the rental market for a number of reasons.”

New renter profiles means new opportunities and challenges

While this swell of renters represents a major opportunity for multifamily owner-operators, it also calls for a shift in how landlords both position their assets and assess potential renters.

One of the key shifts in recent years that landlords must account for is the move toward work from home, which represents a fundamental change in how renters look at potential units.

“If you’re building a new property, providing access to reliable and high-speed internet, coworking spaces, and other amenities like smart home devices is key,” says Shelly.

Another change in how renters work is giving landlords major headaches. Traditionally, the majority of applicants worked jobs that provided them with W2s, which, along with a simple credit report, allowed landlords to assess a renter for risk before approving their application. Today, between self-employment and gig work, plenty of applicants who can make their monthly rent payments lack the traditional paper trail that landlords have long relied on.

“They’re still great renters,” says Shelly, “but it’s created more uncertainty and risk on the screening side for owner-operators.”

The danger comes when landlords don’t update their approval process to account for these changing renter profiles, risking a hit to their occupancy. By proactively updating their process with modern tools or adopting a more flexible screening approach that considers a diverse range of applicant backgrounds–whether self-employed, gig workers, or international students without an income–owner-operators can capitalize on the growing rental demand rather than being overwhelmed by it.

Remaining competitive in a growing rental market

As the rental market grows, there are a host of ways for owner-operators to position themselves for success in the coming years.

First and foremost, understanding renter profiles and adjusting their properties and application process to capture a diverse pool of renters will help them keep occupancy high.

Secondly, partnering with a company like TheGuarantors to mitigate risk is becoming increasingly important to keeping properties healthy.

“Historically, owner-operators found ways to re-qualify renters and make themselves feel comfortable accepting these applicants, whether that’s increased deposits or using a parent or relative as a co-signer,” explains Shelly. “These methods don’t really protect you from downside risk on the backend.”

TheGuarantors’ Rent Coverage protects landlords from the fallout when a renter defaults on their rent payment, avoiding the costly process of recouping costs by taking them to court.

All of these solutions add up to what Shelly describes as “smart occupancy,” a holistic strategy that not only protects owner-operators from potential losses but enables them to grow their renter pool and qualify more applicants with less risk. It’s a win-win for landlords and renters alike, who can benefit from better-appointed units and avoid burdensome deposit and co-signing requirements.

“That’s where we come in,” says Shelly. “We want landlords to feel comfortable accepting renters and help them sleep better at night knowing their assets are protected.”

2025 represents a major turning point for multifamily owner-operators. Those who can adapt to changing renter profiles and leverage their properties to appeal to new tenant preferences have a unique opportunity to capitalize on a growing market segment. Taking an active role in shaping the future of your properties is the best way to ensure that you don’t miss out on this generational opportunity.