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12 Over the Next Ten Years, Aging of the Baby Boomers and Millennials Will Drive Growth in Renter Households Renter Households (Millions) 7 6 5 4 3 2 0 Undri 25-29 30-34 35-39 40-44 4549 50--94 55-59 66-64 65-50 70-74 75-79 80and Over Age of Household Head 0 2006 c` 2016 0 2025 Note: JCHS projection for2025 assumos homeawnershlp rates by five yearns group and raco/nthniuity hold st current valvas. Sources JCHS ta5ulalions of Us Contra Bureau, Current Population Surveys; JCHS 2016 Household and Tenure Projections. Without the downpayment and other costs entailed in buying and selling homes, renting is often an affordable housing option for young adults. Indeed, the 2015 American Housing Survey shows that 86 percent of all newly formed households were renters. Low trans- action costs also make renting a good choice for households that move frequently. As measured by the Current Population Survey, renters accounted for three out of four residential moves in 2016, as well as for the majority of moves made by all age groups. But renting is not merely a life phase or a steppingstone to home- ownership for all households. The JCHS analysis of PSID data also indicated that 17 percent of renters in 1995 remained rent- ers through 2015, In addition, 23 percent of homeowners in 1995 switched to renting sometime in the ensuing two decades, often in response to changes in family structure and other life events. For instance, renters made up over 80 percent of recent movers who were divorced or separated. Other owners shifted to renting to have less responsibility for home maintenance. This preference, along with the desire to downsize or to meet accessibility needs, is reflect- ed in the increasing shares of renters among the oldest age groups. PSID data indicate that 1 in 12 owners age 55-64, 1 in 8 owners age 65-74, and 1 in 5 owners age 75 and over made own -to -rent transi- tions between 2005 and 2015. THE OUTLOOK Given the sharp swings in rentership rates over the past two decades, predicting future rental demand is difficult. Shifting preferences, macroeconomic conditions and government policy help to shape many of the factors that determine rates of renting and owning, including housing affordability, mortgage accessibil- ity, labor markets, and household incomes. As a starting point, though, future rental demand depends on the rate of household growth. JCHS projections suggest that overall household growth will be strong over the next 10 years as increasing numbers of the large millennial generation reach adulthood (Figure 131. At the same time, the aging of the baby -boom generation will lift the number of older households. Household growth is therefore expected to total 13.6 million in 2015-2025, before moderating to 11.5 million in 2025-2035 when losses of older households begin to accelerate. Despite the aging of the adult population (which tends to favor high- er homeownership rates), certain other demographic forces should support healthy growth in rental demand. Over the next 10 years, the younger half of the millennial generation—the largest genera- tion in US history—will move into their 20s and 30s, the age groups most likely to rent. In addition, minority households are expected to account for nearly three-quarters of household growth in 2015-2025 and fully 90 percent in 2025-2035. If minority homeownership rates remain at current levels, the national rentership rate will increase in the coming decades. Taking all of these forces into account, the base scenario from the 2016 JCHS household tenure projections shows that, if homeowner- ship rates stabilize at their 2015 levels, underlying demographics— that is, growth and change in the composition of US households by age, race/ethnicity, and family type—will support the addition of 4.7 million renters and 8.9 million homeowners between 2015 and 2025.