What is the effect of rentals on a new improving economy? See What Fortune magazine has to say about it....
FORTUNE -- As America's housing market slowly heals, good news is pouring in from homebuilders: They're building more; they're hiring more workers; they're building bigger houses. Still, some things haven't changed: Renters (as opposed to buyers) are still driving the rebound of the residential construction industry.
Construction of single-family homes rose to a nearly five-year high in February, the Commerce Department reported Tuesday. Single-family home building, which made up about 66% of housing starts last month, rose 0.5% to a rate of 618,000 units -- the highest level since June 2008. This follows a 31.5% rise in single-family construction in the last year.
Although this might suggest buyers are driving homebuilding again, renters are still playing an unusually large role in the home construction industry -- a trend that's lasted since 2007 when the housing market collapsed. Construction of multi-family homes, typically destined for the rental market, make up about 33% of all residential construction today. That's markedly higher than the average of nearly 20% over the past two decades. More