Your Rental Matchmaker

As housing affordability rapidly worsened over the course of the 2010s, workers in many of the nation’s hottest markets gradually began to move further and further from the urban core in search of more affordable housing. This led to a rapid surge in the population of “super commuters” – workers who travel 90 minutes or more each way to work. But as the remote work revolution has taken hold, many of these long-distance commuters are now staying home, and the number of super commuters has plummeted, erasing a full decade of expansion. The underlying affordability crisis has not gone away, but changes in the ways we work are significantly altering the role of job location in housing choice. In this report, we dive into the latest data to better understand the rapid evolution in super commuting trends.

A more apples-to-apples comparison of the generational divides in homeownership can be made by controlling for age. The chart below shows that at each stage of life, the last three generations have bought homes slower than the generation that preceded them. Millennials have had the slowest transition from renters to homeowners. By age 30, 42 percent of millennials owned their homes, compared to 48 percent of gen Xers, 51 percent of baby boomers, and nearly 60 percent of silents. That gap persists through their 30s and into their early 40s.

A handful of economic and cultural factors explain these generational gaps. The most significant was the Great Recession, which suppressed homeownership across all generations but was particularly damaging to millennials, whose early career trajectories were shaped by a historically unstable economy. During the economic recovery that followed, many millennials were drawn to centrally-located jobs in cities where starter homes became increasingly scarce and expensive. While many millennials purchased homes during these years, others spent more time living at home or in rentals, delaying major life events like homeownership, marriage, and childbearing when compared to earlier generations.

In 2020, the COVID-19 pandemic drove an even deeper wedge between millennial homeowners and millennial renters. On one hand, millennials purchased an outsized share of homes during the first two years of the pandemic, when mortgage rates fell below 3 percent. On the other hand, housing inventory dropped to all-time lows and for-sale prices skyrocketed more than 40 percent. For millennial renters who could not afford to buy a home in the earliest stages of the pandemic, homeownership opportunities waned dramatically in the years that followed. Mortgage rates spiked, bringing modest relief to list prices but pushing monthly ownership costs even higher.

Today’s CPI release shows that the year-over-year growth rate of the rent component has finally leveled off, coming in at 8.8 percent in March, which is flat compared last month. On a month-over-month basis, rent CPI increased 0.5 percent in March, down from 0.7 percent in February. In contrast, the Apartment Rent national rent index is currently up by just 2.6 percent year-over-year, a growth rate that has been cooling rapidly for over a year after peaking at a staggering 18 percent in December 2021.

The divergence of our index from the rent component of CPI may appear counterintuitive, but it actually reflects the fact that the two indexes are simply designed to capture different things. Specifically, the Apartment List rent index measures composition-controlled price changes for new leases, while the CPI tracks rent changes across all households (for a more in depth explanation of this difference and of how housing costs are incorporated into CPI, see this explainer article). Because of these differing methodologies, our index can effectively serve as a leading indicator for the rent component of CPI, as confirmed in a recent analysis by economists at the Cleveland Fed. Given this reliable lag, we knew that it was just a matter of time before rent CPI hit its peak, and that time has now arrived. Going forward rent CPI will gradually fall, helping topline inflation to cool more rapidly.