Category Archives: Rental Market News
Renter Households Exceed 38 Million in 2011
Axiometrics reports that while the number of U.S. homeowners has decreased by 2 million since the housing crisis began in 2006, the number of renter household has increased by 4 million during the same time period. The growth from 2002 to 2011 is even more dramatic, with renter household increasing from approximately 33.5 million to 38.5 million, a jump of over 16%.
According to the article “rent growth has remained strong as compared to the rate of job growth,” over the past few years, as more households choose to rent simply because of the unstable dynamics underlying the current housing market. Potential homeowners fear investing a substantial portion of their net worth into assets that aren’t likely to see a substantial increase in value any time soon—and, in fact, may continue to depreciate over the next 3-to-5 years.
As Dr. Sam Chandan, President and Chief Economist at Chandan Economics, states “Tenant choice involves a complex interaction between the cost and terms of mortgages, the availability of equity for down payments, households’ assessments of relative rental and ownership costs, expectations of future house price changes, and behavioral factors that are critically important, but more difficult to quantify.”
Foreclosure Trends and the Rental Market
According to RealtyTrac, “1 in every 605 housing units received a foreclosure filing in September 2011.” In the hardest hit states, which include California, Nevada, Arizona, Florida, Michigan, and several others, the rate was closer to 1 in every 118 households.
Meanwhile, Multifamily Executive reports rapidly dropping vacancy rates and increasing rent prices for rental units in some of the markets hardest hit by foreclosures. Rental occupancy rate has jumped by more than 275 basis points in Detroit, MI; 239 basis points in Cape Coral, FL; and 267 basis points in Reno, NV, just to name a few of the affected cities.
According to the report, “Overall rent growth, which began an unanticipated surge in 2010, despite a lack of job and corresponding household creation, looks to continue at a trajectory that could push national apartment rents to historic highs by the end of the year.” Cities with some of the highest rate increases include San Jose, California; Portland, Oregon; Savannah, Georgia; and Chattanooga, Tennessee. All of these cities have seen rate increases of right around 10% this year alone.
These numbers will only increase as waves of displaced former homeowners start looking for places to live.