Boom in Single Family Residential Rentals

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Boom in Single Family Residential Rentals

Homeownership Rate

 

Q2-2004

Q2-2009

Change

United States

69.2%

67.4%

-1.8%

Northeast

65.4%

64.3%

-1.1%

Midwest

74.2%

70.5%

-3.7%

South

70.9%

70.0%

-0.9%

West

64.5%

62.5%

-2.0%

Data Source: U.S. Census Bureau

Nationwide, home ownership peaked Q2 of 2005 at 69.2%.  Over the past five years, ownership has slid back to 67.4%, for a net loss of 1.8%. This is a zero-sum game; the flip side of this coin is that a decrease in home ownership translates to an increase in single family residential rentals.

According to a recent article by the Huffington Post, “2.5 million homes have been converted into rentals,” since 2007 and about 3.2 million since 2005.  These conversions account for approximately 85% of all “new” rental property. One of the three primary reasons is that many “buyers of foreclosed [and short sale] properties are renting out the homes.” 

If it makes good financial sense for an investor to own the property and rent it out (e.g., positive cash flow - see the cashflow search engine), then doesn't it make even better sense to be an owner occupant? The average home ownership rate, over the past 40 years, is 65.4%. We are currently 2% above average. Are we doomed to fall back to that level?

Comments (1)

David Zablatsky
Avant Realty Group - Needham, MA
Real Estate - Needham, MA

Thank you for the post, Robert!

-David

Sep 20, 2009 07:22 PM