According to the Harvard University Joint Center of Housing Studies latest State of the Nation’s Housing report, an increase in the number of renters and a drop in new constructions are breathing a little much-needed life back into the rental market. Rent rates are increasing and vacancies are decreasing. Additionally, construction of multifamily units is increasing. This news is cause for cautious optimism in the housing market, especially as it slowly regains ground in a sluggish overall national economy.
The depressed economy continues to plague rates of home ownership, and the report finds that the homeowner market still needs some work. “What the housing sector needs is a sustained increase in jobs to bring household growth back to its long-term pace and spur demand,” said Chris Herbert, Director of Research, in a press release from the Joint Center for Housing Studies.“The country has seen new household formations fall well below expected long-run rates due to a falloff in young adults being able to move out on their own and a slowdown in net immigration. Even in 2011, fewer than 700,000 households were added and that’s well below the 1.2 million or more annual trend expected under more normal economic conditions.”
The report does offer hope for the improvement of the homeowner market. “While still in the early innings of a housing recovery, rental markets have turned the corner, home sales are strengthening, and a floor is beginning to form under home prices,” said Eric S. Belsky, Managing Director of the Center.“Unless the broader economy goes into a tailspin, stronger sales should further stabilize prices and pave the way for a pickup in single-family housing construction over the course of 2012.”
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