American cities—and not just the priciest ones—are more and more the domain of renters.

Renters made up the majority of the population in cities at the core of nine of the nation’s 11 largest metro areas in 2013, a sharp change from 2006, when renters were the majority in just five of those cities, according to a new report.

Cities have always had a larger number of renters when compared with suburban areas, in part because the cost of owning a home within a city’s limits is out of reach for many residents, especially in high-cost places such as New York, San Francisco and Washington, D.C.

But the report, scheduled to be released Monday by New York University’s Furman Center and Capital One Financial Corp., found a significant shift in the proportion of renters in all major cities—even in lower-density, relatively inexpensive places such as Houston and Dallas.

A resulting demand for apartments is rising so fast that it is starting to overwhelm supply in many cities, which is pushing up housing costs nationwide. “As the number of renters grow, if the supply of rental housing does not keep up—as it has not in most of these cities—then vacancy rates will fall, rents will rise, and more renters will struggle with the costs of housing,” said Ingrid Gould Ellen, the Furman Center’s faculty director.


In some cases, the rise in the number of renters reflects a reversion to levels before the housing boom, when easy credit and no-down-payment mortgages allowed many renters to become homeowners. Once the boom turned to bust, people went back to renting, either because they lost their homes to foreclosure or they became skittish about owning. In Chicago, renters made up 53% of the population in 1990, then dropped to 46% at the height of the housing boom in 2006 and returned to 52% in 2013.

In other cases, long-term demographic trends and changing attitudes have diminished the appeal of the traditional American dream of homeownership. In Houston, just 41% of the population were renters in 1970. The rate rose to 51% by 2000 then declined slightly during the housing boom before starting to rise again, hitting 54% in 2013.

Texas cities have seen explosive job growth, drawing many transplanted younger workers with entry-level or middle-income jobs. Dallas-based apartment developer Brad Miller said the young people he sees prefer to rent and want to be able to pick up and move to places such as Denver at a moment’s notice without having to worry about whether they can sell a condominium. “They’ll go where the jobs are and where the money is,” said Mr. Miller, president of Encore Multi-Family.

Mark Tobia, a single 27-year-old, moved to Houston from Boston last September to take a job as a project manager in construction for Group 1 Automotive Inc. He chose to rent an apartment in a complex owned by Camden Property Trust not far from the city’s downtown. “I didn’t want to buy a place not knowing if I’d like Houston or if I’d like the job,” Mr. Tobia said, adding that he has since become comfortable with both.

But for many, slow income growth and a lack of savings are the main reasons for renting instead of buying, even as mortgage rates remain historically low. Accumulating savings has become even more difficult as rents rise in many cities. Rents outpaced inflation in all of the 11 cities except for Dallas and Houston, where they remained largely flat, according to the NYU-Capital One report. Rents rose the most in Washington, D.C., over the seven-year period, with a 21% increase in the median rent when adjusted for inflation.

“For many people, the biggest obstacle to buying is saving enough for a down payment, which is more difficult if you’re paying a lot of rent,” said Jed Kolko, chief economist at Trulia Inc.

The Furman Center found New York City no longer has the largest share of renters of any of the big cities, having been outstripped by Miami, where 65% of the population rents, a percentage point higher than New York. The nation’s largest city is also one of several where the percentage of renters has been on a long-term decline, falling from 71% in 1970 to 64% in 2013.

Among the 11 cities, Philadelphia had the smallest percentage of renters in 2013, just 44%, up from 37% in 2006 and 33% in 1970. Nationwide, 64% of households were own-occupied and 36% were renter-occupied at the end of 2014.

In the short term, economists and developers said they expect to see the percentage of renters continue to rise in most cities. “I don’t think the American dream is dead,” said Mr. Miller, the Dallas developer. “It’s different, and it’s taking longer for people to obtain the American dream.”

This article was originally published in The Wall Street Journal and can be found here.