In what is a promising sign for some in the real estate industry – and a worrisome one for others – demand for home rentals in the U.S. has surged in the second half of 2011, a sign that more and more people are looking to rent homes rather than buy them.
Ever since the collapse of the housing market occurred in 2007, new and existing home sales have plummeted drastically. Rentals, as one would expect, have surged to fill the void as families, wary of falling values and the enormous financial burden of a home loan in the midst of an uncertain economy and recession, seek to rent rather than buy. This has mostly applied to apartments and multi-family homes, though, not single family homes – until now.
According to data amassed over the past three years, the number of rental households – i.e. families that moved into rental properties – rose as the number of owner-occupied households fell. Similarly, single family home rentals have went up to go along with a steady rise in rental prices and occupancy rates for apartments, townhouses, and duplexes.
Indeed, many have pointed to this rise in rental demand as one of the new strengths of the real estate market, going as far as to point to a paradigm shift in the way Americans view housing – especially with the promise of additional price decreases over the next 12-18 months and perhaps beyond. Renting is seen as cheaper, or, at the very least, a lot less frustrating and worrisome than taking out a mortgage and owning a home, even with today’s dirt-cheap interest rates.
Owners of rental properties are basking in the flood of demand for their properties. The demand for property managers has increased dramatically, and more and more communities are seeing a rise in demand for multi-family properties or single-family rentals, even away from big cities that are typically the hotspot of these properties.
This news is not good for everyone in the industry, however. Analysts point to low demand in the housing market as a sign of weakness in the overall economy, especially when new home sales are factored into the equation. Instead of building new homes, people are choosing to rent – and not even buy existing homes.
Others, though, disagree, especially those who believe that the federal government’s proposal to unload mass numbers of government foreclosures to the private sector to turn into affordable rental units is a sound solution to high existing foreclosure inventory.
Regardless of what side one takes, the truth of the matter is that rentals will remain in high demand as long as uncertainty keeps people from heading to the bank and applying for a mortgage –if they even qualify. Americans by and large still want to own homes, but until situations improve, they won’t.