Homeowners vs Renters: A Statistical Comparison

There are key differences between homeowners and renters. Below you’ll find a set of interesting statistics comparing the two.

There Are 83 Million Owner-Occupied Households in the U.S.

Homeownership remains popular in the United States, even as housing costs tend to rise. As of late 2020, the United States had around 82.8 million owner-occupied households across the country. That represents a year-over-year increase of 2.1 million households.

[Source: Pew Research Center]

There are 43 Million Renter-Occupied Households in the U.S.

The number of renters in the United States does tend to ebb and flow, mainly because economic conditions can have a major impact on the affordability of homeownership. However, while renting is a popular option, there are fair fewer renter-occupied households in the United States.

Overall, there are about 43 million renter households in the country. That’s nearly half of the number of owner-occupied properties.

[Source: Harvard University Joint Center for Housing Studies]

65.8% of Households Own Their Homes

When you look at all households in the United States, 65.8% are owner-occupied. That metric includes properties with existing mortgages as well as homes that are considered paid-in-full.

[Source: Pew Research Center]

Just 45% of Renters Could Afford to Buy in Their City

One of the biggest challenges aspiring homeowners face is affordability. In some cases, renting isn’t as much of a choice as it is an outright necessity. Rising housing costs have effectively priced many people out of the market.

On average, just 45% of renters could shoulder the financial burden associated with buying an average property in their current city. The median-priced home in the region simply wouldn’t be affordable to 55% of renters.

[Source: MarketWatch]

In the U.S., the Median Household Income of Homeowners is $72,615

Income levels have a significant impact on whether homeownership is practical. Among American homeowners, the median annual household income is $72,615. That’s higher than the median household income for the country, which sits at $68,703.

[Source: United States Census Bureau and Joint Center for Housing Studies at Harvard University]

The Median Household Income of Renters is $40,500

In many cases, affordability plays a significant role in whether someone rents or buys a home. Among renters, the median annual household income is $40,500. That’s more than $30,000 below the median yearly household income of homeowners and more than $28,000 below the median household income in the country.

[Source: Center on Budget and Policy Priorities]

The Average Homebuyer Has a Score of 731

Credit scores also play a major role in whether a person can become a homeowner. Not only do aspiring homebuyers need to meet any minimums set by lenders, but their score also has a significant impact on their mortgage interest rate, impacting overall affordability.

On average, homebuyers have a FICO credit score of 731, placing the typical buyer toward the higher end of the “Good” credit score category, which includes scores from 670 to 739. Additionally, that score is 20 points above the national average of 711, showing that aspiring homeowners are in better financial shape than the average American.

[Source: Value Penguin and Experian]

The Average Credit Score of a Renter Is 638

While the average homebuyer has a credit score of 731, renters average far below that mark. The average credit score of renters in the United States is 638. Not only is that 93 points below the average homebuyer, but it’s also 73 points below the national average.

Additionally, that means most renters don’t fall into the “Good” credit score group. Instead, they fall into the “Fair” category, which includes scores from 580 to 669.

[Source: Million Acres and Experian]

The Average Monthly Mortgage Costs $1,609

Among homeowners in owner-occupied properties that have a mortgage, their average monthly housing cost is $1,609.

[Source: United States Census Bureau]

The Average Amount Spent on Rent Is $1,641 to $2,012, Depending on Unit Size

Depending on the size of the unit, the average rental price ranges from $1,641 for a studio to $2,012 for a three-bedroom unit. While this makes renting seem more expensive, renters don’t have to shoulder most maintenance costs. Additionally, they may have utilities included, though that isn’t always the case.

[Source: Apartment Guide]

Homeownership Rates Are Highest Among White Households, Coming in at 73.8%

If you look solely at non-mixed-ethnicity households, homeownership rates are highest among those that fall into the non-Hispanic white-alone category. In that group, the rate sits at 73.8%.

[Source: United States Census Bureau]

53% of Hispanic Households and 58% of Black Households Are Renters

When it comes to renter demographics, minorities are far more likely to be renters than homeowners. Fifty-eight percent of black households are headed by renters. The same is true for 53% of Hispanic households.

For comparison, fewer than 31% of white households are headed by renters.

[Source: United States Census Bureau]

Homeowners Spend 16.4% of Their Household Income on Housing

The percentage of household income that ends up going toward housing expenses can have a major impact on a household’s lifestyle, stress levels, and more. On average, homeowners send 16.4% of their household income to housing-related expenses, including costs like mortgage payments, homeowner’s insurance, and property taxes.

[Source: Million Acres]

Over 45 Percent of Renters Send 30+% of Their Income to Housing Costs

Common advice from many personal finance experts says that a household shouldn’t direct more than 30% of their income toward housing expenses. If they do, the household is at risk of becoming cost-burdened. If that occurs, it may struggle to manage other critical costs that come with daily living.

Usually, it’s safe to say that most households would like to stay under the 30% mark. However, that doesn’t mean it’s possible or practical for everyone.

Nationwide, 45.1% of renters dedicate 30% or more of their household income to rent and related expenses, like utility costs. In states like Florida, Hawaii, Vermont, and California, the percentage is much higher, with over 50% of renters in those states crossing that 30% threshold.

[Source: Insurance Information Institute]

More Than 79% of Senior Citizens Own Their Home

Homeownership rates increase with age. Among households headed by someone age 65+ years old, the homeownership rate is 79.3%.

After that age group, 55 to 64-year-olds have the next highest homeownership rate, sitting at 75.7%. In third are 45 to 54-year-olds, coming in at 69.4%, while 35 to 44 years olds are fourth with a homeownership rate of 62.0%.

All of the previous groups are reasonably close to the one above it. However, for those younger than 35, there’s a steep drop-off. Among those age 35 and younger, the homeownership rate is a mere 38.1%.

[Source: United States Census Bureau]

65% of Households Headed by Americans Under 35 Are Renters

With lower homeownership rates, it likely isn’t a surprise that 65% of households that are headed by a person age 34 or younger rent.

In comparison, when a household is headed by a 35- to 44-year-old, 41% of households rent. Additionally, only 28 percent of households overseen by 45- to 64-year-olds rent, and a meager 21 percent of those run by someone age 65 or older do.

[Source: Pew Research]

The Median Age of Homebuyers Is 47 Years Old

In recent years, the median age of homebuyers has mainly been on the rise. By 2019, 47 became the approximate median age of American homebuyers. As a comparison, in 1981, the median age was actually 31.

[Source: MarketWatch]

The Median Age of Renters Is 38 Years Old

Many people would assume that the median age of a renter would be significantly younger than the median age of homebuyers. In reality, the numbers are actually closer together than you’d expect. For renters, the median age is 38 years old.

There are several influences in play here. First, the average age of a person in America is actually climbing. Longer lifespans and lower birth rates are both part of that equation, causing the median age in the U.S. to shift from 37.2 to 38.2 between 2010 and 2018.

Rising housing-related costs are also a factor. In some cases, people simply can’t afford to purchase a home where they live, causing them to remain in the renter group.

[Source: Governing and United States Census Bureau]

The Desire to Be a Homeowner Is the #1 Reason People Buy

Twenty-nine percent of buyers say that the desire to become a homeowner is their main motivation for making the purchase, causing that to be the number one reason that people become homebuyers.

[Source: National Association of Realtors]

72% of Renters Would Like to Own a Home

While renting may be the practical choice for many, the vast majority of renters do dream of homeownership. Seventy-two percent of renters would like to make that dream a reality at some point during their lifetime.

[Source: Pew Research]

64% of Millennial Homeowners Regret Their Home Purchase. Just 33% of Baby Boomers Feel the Same Way

While the majority of people dream of buying a home, not everyone who moves forward with it is happy in the end. Buyer’s remorse does happen, and a surprising number of homeowners actually regret their purchase. However, buyer’s remorse tends to be a bigger issue with younger buyers than older ones.

64% of Millennials homeowners have at least some regrets regarding their purchase. Having to shoulder the high costs of maintenance is the most commonly cited one, but large mortgage payments, believing they overpaid, and dissatisfying interest rates also come into play.

7.5% of COVID Stimulus Money Recipients Used the Cash to Pay a Mortgage

In early 2021, a round of COVID-19 stimulus payments reached qualifying households. Of those who received the funds, 7.5% put the cash toward a mortgage.

[Source: iPropertyManagement]

10.3% of COVID Stimulus Money Recipients Used the Money to Pay Rent

When the stimulus month came out, 10.3% of the recipients used the cash to pay rent. Considering that an estimated 160 million payments were issued, that means nearly 16.5 million were at least partially directed towards rent.

[Source: iPropertyManagement and Forbes]

64.3% of Doubled-Up Households Are Owner-Occupied

When people envision having a roommate, they typically think about renters who need a financial boost. In reality, having a roommate or a non-spouse or non-partner adult living with a homeowner in an owner-occupied property is actually more common. Among doubled-up households, 64.3% are also owner-occupied.

[Source: Porch]

35.7% of Doubled-Up Households Are Renter-Occupied

When it comes to doubled-up households, the majority aren’t renter-occupied. Only 35.7% of doubled-up households are headed by renters.

[Source: Porch]

The Bottom Line

Ultimately, the homeowner vs. renter statistics above are pretty fascinating. They give you insights into how the lives of the two groups differ. In some cases, they highlight disparities that may not be obvious on the surface. In others, they are simply surprising tidbits.

85% of Homeowners Have Property Insurance

In the United States, 85% of homeowners have some form of property or homeowners insurance. The high adoption rate partially has to do with mortgage requirements.

Many lenders make insurance on properties they finance mandatory, increasing the odds that they will receive what’s owed even if a property is destroyed. As a result, homeowners insurance isn’t optional, and failing to maintain it can come with consequences.

On average, a homeowners insurance policy costs $1,445 per year. That breaks down to about $120 per month.

[Source: Value Penguin]

37% of Renters Have Renters Insurance

In most cases, renters insurance looks affordable. On average, a policy costs $179 per year, which breaks down to about $15 per month. However, just 37% of renters have a renters insurance policy.

There can be a few reasons why a renter may not insure their property. One is that many renters think that their landlord’s insurance policy actually offers them protection. That leads them to believe that getting their own renters policy isn’t necessary. However, a landlord’s policy doesn’t extend to the renter’s property, putting the renter at risk of severe losses.

For others, it is an issue of affordability. While $15 per month seems manageable to many, those with incredibly tight budgets might not have room for it.

Finally, denial of coverage can also occur. Renters with credit issues may not be able to get a policy. Many property insurance companies do run some level of credit check, and they may deny coverage to someone they consider a poor risk.

Additionally, insurers may refuse to cover renters in areas they deem high risk. This can include denying coverage to anyone living in a single building, a specific neighborhood, or a larger zone.

[Source: Insurance Information Institute]