If Americans Can’t Buy Homes, Where Will They Live?

by Anita Sonawane
September 1, 2026
Investments, Multifamily Education
(0)
05 Mins

For years, the American housing conversation has focused on one question: When will people be able to afford to buy a home again? But there is another question that may be more important for real estate investors: What happens to all the people who can’t buy?

They still need somewhere to live.

That is where the connection between homeownership and multifamily housing becomes interesting. When buying becomes less affordable, housing demand doesn’t disappear. It shifts toward renting. And several forces are now making that shift more significant, from high borrowing costs and elevated home prices to limited supply and growing challenges in condo financing.

Even Condos Are Becoming Harder to Buy

Condos have traditionally provided a more affordable path to homeownership, particularly for first-time buyers who cannot stretch their budget to a single-family home. But financing a condo is becoming more complicated because lenders are increasingly looking beyond the individual borrower and examining the financial and physical condition of the entire building.

Issues such as inadequate reserves, deferred maintenance, insurance concerns and large assessments can make a condo harder to finance. That means someone can have the income, credit and down payment to purchase a unit and still struggle to obtain a mortgage because of the building itself.

This matters because the condo market has historically served as an important bridge between renting and owning. If that bridge becomes harder to cross, some potential buyers may remain renters for longer.

And the broader affordability numbers aren’t making the situation any easier.

The Math Behind the Affordability Problem

Mortgage rates remain considerably higher than the ultra-low levels Americans became accustomed to during the pandemic. At the same time, home prices have not fallen enough to completely offset the higher cost of borrowing.

According to Redfin, the typical U.S. household earns roughly $88,000 a year, while a household needs approximately $110,000 in annual income to afford the typical U.S. home. Only about one-third of homes listed for sale are affordable to the typical household, based on Redfin’s measure.

The problem isn’t simply that buyers need lower mortgage rates. They also need homes at prices that match household incomes.

Supply isn’t providing an easy solution either. U.S. residential construction fell 12.4% from June to July 2026, while single-family housing starts were down 13.5% from a year earlier. When fewer homes are being built, particularly at attainable price points, the affordability problem becomes harder to solve.

For a household sitting on the sidelines, the decision can become fairly straightforward: if buying requires a much larger monthly payment than renting, waiting may make more financial sense.

But waiting to buy does not mean leaving the housing market.

It means renting.

Who Is Renting?

The renter population is also changing. It is no longer accurate to think of renters primarily as young adults who are renting for a few years before buying their first home.

Younger generations are certainly a major part of the market. Harvard’s Joint Center for Housing Studies estimates that Millennials account for approximately 15.2 million renter households, or about one-third of all renters. Gen Z already accounts for approximately 10.4 million renter households, representing about 23% of renters.

But rental demand extends well beyond younger households. The number of renter households headed by people aged 60 and older increased by approximately 2.3 million between 2014 and 2024. Older households may rent for different reasons than younger households — including convenience, flexibility and avoiding the costs and responsibilities associated with maintaining a home.

That makes the rental market much broader than a temporary solution for people who haven’t accumulated enough money to buy.

Is Renting Becoming a Longer-Term Choice?

This may be the most important shift to watch.

The traditional housing progression was simple: rent for a few years, save for a down payment, buy a home and build equity. Today, that progression is becoming less predictable. When the monthly cost of buying remains substantially higher than renting, households have less financial incentive to rush into ownership.

Realtor.com reported that renting a starter home was cheaper than buying one in all 50 of the largest U.S. metropolitan areas in July 2026. At the same time, median asking rents were down 1.4% year over year, marking the 36th consecutive month of annual rent declines.

That combination is important. Renting isn’t necessarily becoming more expensive at the same time that buying is becoming more difficult. In many markets, renters are actually seeing relatively favorable conditions.

A household that originally planned to rent for two years may therefore rent for five. A couple waiting for mortgage rates to improve may continue renewing its lease. And someone who once viewed renting as a temporary stage may decide that the flexibility and lower monthly cost make renting a reasonable long-term choice.

That doesn’t mean Americans are abandoning homeownership. The national homeownership rate remains around 65%. The more important point is that a household can still aspire to own a home while remaining a renter for several additional years.

Takeaway for Multifamily Investors

This is where the housing affordability story becomes relevant to multifamily real estate.

The argument is not as simple as “people can’t buy homes, so apartment rents will rise.” Multifamily investors still have to contend with new apartment supply, local employment conditions, insurance costs, property taxes and purchase prices. In some markets, substantial new construction is already putting pressure on rents.

The stronger investment thesis is about durable housing demand.

If households remain renters longer, they continue to need apartments. If condo financing becomes more difficult, some would-be buyers may remain in rental housing. If new home construction slows while household formation continues, the demand for existing rental housing can remain important even when rent growth is modest.

For investors, the question therefore isn’t simply whether Americans are renting. They clearly are.

The more important questions are where they are renting, why they are renting and whether the demand is likely to persist.

Markets with strong employment and population growth, limited housing supply and a meaningful gap between the cost of renting and owning may deserve particular attention. The quality of the property and the economics of the acquisition still matter, but the underlying demand for housing provides an important foundation.