9.3 Million Affordable Rentals Disappeared in 10 Years

For most people, finding an affordable rental is what makes it possible to leave home, build some savings, get a sense of the housing non-negotiables, and work toward the goal of homeownership. 

When that first lease is out of reach, homeownership also moves further away.

Two recent Realtor.com reports are showing how much this impacts buyers today. One tracks the structural disappearance of entry-level rentals over decades. The other captures what’s happening to the generation that came of age in the middle of it: 58% of young adults who moved out have since moved back home, and 30% of those who haven’t bought a home yet don’t expect to ever purchase one. 

What the Starter Rental Was and How It Vanished

Let’s go back to 1950s New York City, when single-room occupancy units (SROs) accounted for roughly 10% of all rental units, for the modern equivalent of $100 to $300 a month. Today, that number is closer to 2%. SROs were phased out at scale, with more than 1 million units destroyed or converted between 1970 and 1980 alone (Pew Research).

But SROs are only part of the picture. Take a look at the broader collapse of affordable rentals:

• From 2014 to 2024, the number of rentals priced under $1,400 fell by 9.3 million units
• Over that same period, rentals at $1,400 or more increased by 11.8 million units

The market replaced affordable options with expensive ones. Much like new single-family homes are often priced well above the median, let alone “starter home” price points.

Jiayi Xu, economist at Realtor.com, puts it plainly:

“Entry-level rentals are the first rung of the housing ladder. An affordable entry-level rental gives a young household the financial breathing room to build savings, establish credit, and accumulate the down payment that makes homeownership possible.”

When that rung disappears, moving out of your family home is much harder to afford, especially when it’s harder to find jobs that pay enough to cover rent (even when it’s split 2-3 ways).

What Happens When Starter Rentals Disappear

When young adults can’t afford to move out, they can’t form new households. And when household formation stalls, the economic consequences are far-reaching.

Research from economists Daniel Cooper and María José Luengo-Prado found housing costs and business-cycle conditions explain up to 70% of the difference in household-formation rates across young adult cohorts. 

Their research covered cohorts from 1979 and 1997, well before the current affordability crisis hit its peak. The trajectory since then has only gotten worse, and Harvard’s Joint Center for Housing Studies projects where it’s heading:

• The U.S. will add approximately 8.6 million households from 2025 to 2035, roughly 860,000 per year
• That would represent less household growth than in any of the past three decades, including the already sluggish 10.1 million added in the 2010s
• From 2035 to 2045, projected growth drops to just 5.1 million households, the lowest rate in at least 100 years

The geographic consequences are already visible. Instead of concentrating in traditional hubs like New York City, Los Angeles, and San Francisco, young adults are landing in midsize markets like Colorado Springs, Austin, and Denver, where a competitive job market and manageable rent still coexist. 

The coastal giants have priced themselves out of the household formation business.

Jiayi Xu explains what cities are actually losing when affordable rentals disappear:

“When cities lose their entry-level rental stock, they don’t just lose affordable housing. They lose the conditions that make young household formation possible in the first place—and with it, the workforce pipeline that sustains long-term economic growth.”

The Boomerang Generation: Who’s Moving Back and Why

A SpareFoot survey of 981 Gen Z adults and young millennials found 58% of young adults who moved out have since moved back home. 

A separate Thrivent survey of 2,325 adults found nearly 30% of adults aged 18 to 35 had moved back at least once, with 32% saying they had never moved out at all.

The top reasons young adults are moving back:

• Unaffordable housing is the primary driver (45%), ahead of job loss or reduced income (36%)
• 34% moved back specifically to save for a down payment
• 26% moved home deliberately to save money
• 22% moved back to build emergency savings
• 13% are paying off student loans

The states where housing costs hit hardest show the highest rates of young adults still living at home:

• 33% of adults aged 18 to 34 live with parents nationally (U.S. Census)
• New Jersey: 44.1%
• Connecticut: 41.3%
• California: 39.1%
• Maryland: 38.5%
• Florida: 36.6%

What’s changed alongside the economics is the cultural framing. Three in four young adults now call this a smart financial strategy, and 62% say the stigma around moving back home has faded compared to previous generations. 

Here’s Where Agents Fit Into This

The boomerang buyer has been saving deliberately, often for years, with a specific milestone in mind. Understanding which milestone they’re working toward changes how you work with them:

• Saving for a down payment (34%)
• Building emergency savings (22%)
• Paying off student loans or existing debt (13%)

Don’t overlook the parents in this equation. Nearly half (47%) of parents are taking real financial hits to support boomerang arrangements, and they may be the co-signers or co-buyers at the closing table:

• 43% are cutting personal spending
• 36% are delaying major purchases
• 19% are cutting retirement contributions

Fifty-five percent of parents expect the arrangement to last at least a year, and 1 in 4 young adults think it’s unlikely they’ll move out within 5 to 10 years. These are buyers you’re building a relationship with now, well before they’re ready to close.

The multigenerational dynamic is also reshaping what clients are looking for when they do buy. 

In high-cost markets, buyers are actively seeking properties that can accommodate adult children or aging parents: private bedroom entrances, first-floor guest suites, finished bonus rooms, and multigenerational layouts. 

Go into every buyer consultation knowing there could be a family dynamic in play, and you’ll ask better questions than most.