Suburban Rentals Surge as Buyers Seek Affordable Housing Options Outside Urban Areas

Renting is becoming increasingly popular in the suburbs as homeownership remains unattainable for many potential buyers. From 2018 to 2023, rental rates jumped by at least 5 percentage points in 11 of the 20 suburbs surrounding major U.S. metro areas, according to an analysis by Point2Homes. Notably, during this period, 15 suburbs transitioned from having a majority of homeowners to predominantly renter communities. This trend is observable in both rapidly growing Sun Belt regions like Dallas, Houston, and Miami, as well as in Northeastern cities such as Boston and Philadelphia.

In five of the top 20 metro areas—Dallas, Minneapolis, Boston, Tampa, and Baltimore—the suburbs are witnessing an increase in renters at a faster pace than the urban centers they support. For instance, Dallas suburbs experienced a 17.6% rise in renters from 2018 to 2023, compared to a 7.9% increase within the city itself. Suburbs like Frisco, McKinney, and Grand Prairie each gained over 5,000 renter households during this timeframe. The reality has shifted, as purchasing a home in the suburban counties surrounding Dallas is now more challenging than in Dallas County itself.

The overall issue of housing affordability has become a national concern, exacerbated by soaring mortgage rates since the pandemic. Currently, average interest rates for a 30-year fixed home loan hover just beneath 7%, a level not seen since before the 2008 financial crisis. In this challenging market, experts suggest the rise in rental properties has helped maintain suburban living standards for those who might otherwise struggle to afford them. Personal narratives reveal the harsh reality of this situation.

Mark, a suburbanite near Chicago, acknowledges that the property he rents is far beyond his purchasing power, while Andrew Decker in Lake Villa dreams of buying his current rental but finds it prohibitively expensive. Advocacy groups highlight the negative consequences of moving families further from urban centers, which can jeopardize access to transportation and employment opportunities. Despite these affordability challenges, many landlords promote the benefits of suburban renting, including the convenience of one monthly payment covering multiple expenses. Developers are responding by building diverse properties, such as multifamily complexes, aimed at families seeking a balance between urban accessibility and suburban benefits.

With remote work becoming more commonplace, the demand for suburban living is not expected to diminish, potentially driving up costs for both buyers and renters alike.