The U.S. has more spare bedrooms than ever before

Introduction

We are currently in the midst of one of the most challenging times for housing affordability in recent memory. The national median rent is currently 22 percent higher than it was just three years ago, and the cost burden rate for renters has risen to a decade-long high. Prices have risen even faster on the for-sale side of the market, compounded by a rapid spike in mortgage rates. For many Americans, homeownership is no longer just a lofty goal, but a seemingly impossible one, and for those who have managed to purchase a home in today’s environment, monthly payments have skyrocketed.

This deterioration of affordability has, at root, been driven by a lack of supply. For years, there have been an insufficient number of new homes built to keep pace with the demand for new household formation. By most estimates, the U.S. housing market is currently dealing with a shortage of millions of homes. But amid this backdrop, a perhaps counterintuitive fact is also true – there are currently more spare bedrooms in American homes than ever before. In this report, we unpack the decades-long trend of spare bedrooms becoming more common and explore what it says about the state of the housing market.

The U.S. has more spare bedrooms than ever before

Looking at household-level Census data going back to 1970, we compare the number of bedrooms in each housing unit to the number of individuals living in each unit. We assume that married couples share a bedroom and that under ideal conditions, all unmarried occupants would have their own bedroom.¹ Comparing these two numbers, we define a household as having a “spare bedroom” when the number of bedrooms in the unit exceeds the number required by its occupants. Conversely, when the required number of bedrooms is less than the number of bedrooms in the unit, we define the unit as having “too few” bedrooms.

Using this definition, we find that 62 percent of all U.S. households had at least one spare bedroom in 2021, while 26 percent had exactly the required number of bedrooms, and 12 percent had too few bedrooms. The share of households with spare bedrooms has been steadily rising for decades, driven especially by an increase in households with multiple spare bedrooms. In 1970, just 13 percent of households had two or more spare bedrooms, but as of 2021 that figure has risen to more than one-in-three (34 percent). Conversely, the share of households with too few bedrooms has fallen by more than half over the same period, from 27 percent in 1970 to 12 percent in 2021.

We estimate that in 1970, there were a total of 35.2 million spare bedrooms in households that had an excess, while in households with too few bedrooms, there was a deficit of 31.1 million bedrooms. Subtracting the latter figure from the former, we estimate that the aggregate number of excess bedrooms was 4.1 million. As of 2021, there are 137.2 million spare bedrooms against a deficit of 24.2 million, putting the total number of excess bedrooms at 113 million, an increase of more than 27 times compared to 1970.

Homes have gotten bigger as household sizes have shrunk

While the magnitude of this explosion of spare bedrooms is striking, the core cause of this trend is actually quite straightforward. Namely, American homes have gotten bigger over time, while household sizes have shrunk.

In 1970, just under half of the nation’s housing stock (49 percent) consisted of homes with three bedrooms or more, but as of 2021, that share has risen to 63 percent. The share of homes with four-plus bedrooms has nearly doubled from 13 percent to 24 percent over the same period. But this expansion of home sizes has been a response to preference, not to need. As homes have gotten bigger, the sizes of the households occupying them have actually gotten smaller. Single individuals living alone accounted for just 18 percent of all households in 1970, but today, 28 percent of all households consist of a single person. Meanwhile, the share of households comprised of three people or more has fallen from 53 percent in 1970 to 38 percent in 2021, and the share of households comprised of five people or more has fallen by half, from 20 percent to 10 percent.

Put another way, research has also shown that the average square feet of living space per-person in the U.S. nearly doubled from 1973 to 2015. This divergence between home sizes and the sizes of the households inhabiting them is the result of multiple interrelated trends. Declining marriage rates and birth rates have led to shrinking household sizes. Meanwhile, a preference for larger homes has been driven by suburbanization, growing wealth, and the increasingly common view of a home as not just a place to live, but as a financial asset that will appreciate over time.

Who has all these spare bedrooms?

Perhaps the simplest predictor of having a spare bedroom is whether one owns or rents their home. As of 2021, 76 percent of owner-occupied homes had at least one spare bedroom, over double the rate for renter-occupied households (35 percent). Both owners and renters have become more likely to have a spare bedroom over time, but the increase has been more substantial among homeowners. Much of this disparity is simply due to differences in wealth between homeowners and renters, but in addition to that, the investment component of homeownership also incentivizes overconsumption.

Monthly rent payments are simply an expense, so renters are unlikely to pay for space that they don’t need. In contrast, homeowners may feel compelled to purchase the largest home that they can afford based on the expectation that a more valuable home will create more wealth as it appreciates over time. As evidence of this dynamic, consider that even among high-income renter households earning over $150,000 per year, just 42 percent have a spare bedroom, far lower than the rate for even low-income homeowners.

The likelihood of having a spare bedroom is also correlated with age, income, and household composition. The share of households with a spare bedroom increases consistently with the age of the household head, starting at 31 percent for households headed by someone age 18 to 29, and peaking at 79 percent for heads of household age 65-plus. Income plays a role, but perhaps not as strong of one as might be expected. 56 percent of households earning less than $50,000 annually have at least one spare bedroom, compared to 67 percent of those earning more than $100,000. It’s worth noting that the disparity across income brackets would be more pronounced if looking only at working age individuals, since seniors who are very likely to have spare bedrooms are also likely to be retired and to therefore log lower incomes.

Household composition also plays a key role. To illustrate this, we group households into four broad groups: single-person households, married couples living alone, households with children under 18, and “all others.” Married couples living alone – who require just one bedroom and often have dual incomes – are extremely likely to have spare bedrooms; 91 percent of these households have at least one spare bedroom and 68 percent have two or more. On the flip side, just 34 percent of households with children have a spare bedroom, while roughly the same share of these households (33 percent) have too few bedrooms, implying that children in these homes are sharing bedrooms. And among renter households with children, more than half (52 percent) have too few bedrooms. This highlights an important distinction – even as spare bedrooms have proliferated, household crowding remains an issue for millions of Americans.

Spare bedrooms increasingly tied up by seniors aging in place

As noted above, seniors are the age group most likely to have spare bedrooms, and the population is aging, this age group is making up an increasingly large share of households. The intersection of these trends leads us to the finding that a significant and rapidly growing share of the U.S. housing stock is being occupied by seniors aging in place in homes larger than they require.

As of 2021, 17 percent of all homeowner households consist of either a single senior (age 65-plus) or a married senior couple living alone in a home with two or more spare bedrooms. In 1970, this household type accounted for just 5 percent of the owner-occupied housing stock, less than a third of the current rate. Even as recently as 2010, the rate was just 12 percent, and in fact, the most recent decade saw the biggest jump in this household type.

This finding is particularly salient right now given the historic deadlock in the for-sale housing market. With few homeowners willing to sell and few prospective buyers able to afford today’s prices and mortgage rates, existing home sales have fallen to the lowest levels since the aftermath of the 2008 housing bubble collapse. At a time when for-sale inventory is desperately needed, nearly 14 million of the nation’s single-family homes are being tied up by seniors aging in place, keeping them unavailable to younger generations who may be better suited to utilize the space more fully. As the population continues to age, this trend is likely to only be further exacerbated in the years ahead.

What are the implications for the future of the housing market?

If spare bedrooms are thought of as an underutilized resource, the huge number of spare bedrooms present in today’s housing market could offer an opportunity as we look ahead to the future. Here we outline a handful of potential implications of this trend.

1. Spare bedrooms as a safety net for young adults: Over time, it has become much more common for young adults to live with their parents, and in the early stages of the pandemic, a surge of young adults moving back home temporarily drove a sharp contraction in the number of American households. More than ever before, younger generations have the option of moving back in with parents or grandparents while getting established in early adulthood, and this trend is likely to continue (of course, it’s important to include a caveat here about the generational nature of wealth disparity – not everyone can rely on the knowledge that they always have a spare bedroom to fall back on).
2. The rise of multi-generational households: Adult children living with their parents can also be a more permanent arrangement. As the population ages, more and more Americans are likely to find that the best option for caring for elderly parents is by living under the same roof with them. Caregiving assistance can also flow in the opposite direction, as the older generation can help offset rising childcare costs by helping to care for their grandchildren. In fact, multigenerational households are already on the rise – the number of multigenerational households is up by nearly a million over the past decade, and the share of households with children that are multi-generational has risen from 7 percent in 1970 to 11 percent in 2021.
3. More opportunities for homesharing: Spare bedrooms don’t necessarily need to be occupied by members of one’s family. Renting out a spare bedroom is an option that provides an additional income stream and may even offer welcome companionship for those who live alone. Whether offered as short-term rentals or traditional leases, renting a spare bedroom rather than a full unit could become an increasingly common arrangement.
4. Accelerating the remote work revolution: The remote work pendulum may have swung back somewhat since the early stages of the pandemic, but it’s become clear that the way we work will never fully return to pre-pandemic norms. According to the latest estimates, 12 percent of American workers still currently have full remote work flexibility, 30 percent have hybrid arrangements, and 28 percent of all work days are from home. It’s likely that many of the rooms we’ve identified in this analysis as spare bedrooms have already been converted to home offices. As the boundaries between home and work continue to blur, bedroom to office conversions will undoubtedly play a key role.
5. A lack of starter homes will remain a challenge: As American homes have grown in size, the traditional “starter home” has become an increasingly rare commodity. In the 1940s, nearly 70 percent of newly built homes were 1,400 square feet or less, but today only 8 percent of new homes are that small. This has made it harder for first-time buyers to crack into homeownership, and may also be part of the reason why so many homeowners have spare bedrooms – they’re simply unable to find options that better match their needs. This imbalance is likely to persist for the foreseeable future.
6. Many millennials’ first owned home may be one they inherit: More than 50 percent of millennials now own homes, but they’ve been slower to hit that milestone than prior generations. And for those who have yet to attain homeownership, it likely feels like a goal that is growing further from reach rather than closer. Given the large share of the housing stock tied up by seniors aging in place, many millennials’ first chance at homeownership may come by way of inheriting a home from a parent (this again highlights the extent to which homeownership drives generational wealth disparities).
7. The role of policy: In recent years, housing affordability has become an increasingly high-profile topic in the national discourse, and as we look ahead to the future, policy could play an important role in allocating housing resources more efficiently. As an example, consider California’s Proposition 19 which took effect in 2021 and allowed seniors to transfer property tax advantages to a new home, in order to encourage increased mobility among this population to hopefully free up housing stock. Portable mortgages could, in theory, offer an analogous solution for homeowners who feel locked in by their low mortgage rates. And land use reforms that allow for increased construction of “missing middle” housing could help to reverse the long-term trend of expanding home sizes.

The fact that spare bedrooms in American homes are proliferating even as housing affordability wanes, speaks to an imbalance in the housing market which is unlikely to be corrected in the near-term. At the same time, spare bedrooms may be an untapped resource that could play a role in relieving some of the existing pressure in the market.