The ‘forever renter’ just turned 42

Not long ago, renting was “just a phase,” like going goth or getting bangs. But no more: The average American renter is now 42 years old. Only one in four renters 18 to 34 expect to buy a home in five years, the lowest level recorded since Gallup first asked in 2013.

It’s not that renters don’t want to buy; many just can’t afford to. According to Harvard’s Joint Center for Housing Studies, home prices have climbed to five times the median household income, up from a price-to-income ratio of 3.2 in the 1990s.

Generation Rent has raised alarm bells among housing advocates, but landlords aren’t surprised. They’ve watched their tenants age in place for years, and know it comes with real consequences for their business.

“One family has been in my house for eight years,” says Los Angeles landlord Aaron Bae. “Their kids have grown up there. They don’t want to move because they like the neighborhood and schools. It’s a good stable situation for me; no turnover costs, no vacancy.”

But these benefits come with trade-offs: It’s really hard to raise rent. “I can raise it only a tiny bit each year, or I risk them leaving, and finding a new tenant is a pain, so I feel stuck,” Bae explains. “I’m also more careful about buying [other properties], since I want to make sure the numbers work with current rental rates rather than what I hope it could be in a few years.” And rather than stick with single-family homes, Bae has diversified into apartments, which have higher turnover and room for rent increases.

Another challenge of forever renters is that they leave little wiggle room to renovate or make repairs. Mike Plactere learned this after acquiring a house on New York’s Long Island with a tenant who’d been there 15 years and still is. When the property’s only bathroom sprung a leak, he had to foot her hotel bill until he repaired it. “That’s real money on a modest rental,” Plactere says. “Long tenancies are stable, but deferred work piles up behind them.” One way he mitigates this is through quarterly inspections “so we find problems before they get out of hand.”

Bae also allows his forever tenants to make home improvements that suit their tastes. “One family asked to paint the walls and put in a garden, and I said go for it,” he recalls. “It made them happier, and they treat the place better.”

“I would gladly raise rent less to have a tenant who cares: It’s less maintenance, fewer headaches, and fewer calls,” agrees Jonathan Greene of the real estate investing site Streamline in Madison, NJ. Plus, he points out, “Forever renters are not always those priced out of the market. Your modern-day forever renter is often just a smart consumer who can see that they can rent a nicer place than they can buy for the same money.”

Learn more about what forever renters mean for landlords.