Over the past 20 years, the number of
U.S. households has increased by roughly 25 percent according to the Census
Bureau's annual March Current Population Survey (CPS). But the overall trend
obscures two very different decades. Between 1995 and
2005, essentially all of the growth in the number of households was driven
by new homeowners. But in the decade from 2005 through 2014, essentially all of
the growth in the number of households was driven by renters.
The surge in renting households over the past decade has been driven by a number of factors. The Great Recession and the foreclosure crisis that followed drove much of this growth, as foreclosed families met their housing needs by renting the kinds of single-family homes they may have otherwise purchased. Even as the recovery has progressed, many of these families may still look to the flexibility provided by rentals as they move for new jobs or other opportunities. This continued demand is a welcome development among investors who bought huge numbers of distressed single-family homes at a steep discount during the recession and subsequently converted them to rentals. Additionally, while the Great Recession forced many Americans to move in with roommates or family, the recovery is now causing these doubled-up households to unwind. And while many of these new households will look to buy a home, it’s likely that many more – particularly younger new households – will look to rent as a middle step before buying a home, further boosting rental demand. Finally, and perhaps paradoxically, high rents themselves could be driving a surge in rental households. These high rents make it very difficult for many would-be buyers to save up for a down payment on a home, keeping them in rental housing for longer than they otherwise may have been were rental growth not as high.
The bursting of the housing bubble left many Americans with the painful lesson that homeownership is not the best option for everyone. But renting is not the best choice for everyone either. A housing market driven entirely by renters is no more sustainable than a housing market driven entirely by owners. In more normal times, we would expect to see more balance in the mix between new owners and new renters.
The surge in renting households over the past decade has been driven by a number of factors. The Great Recession and the foreclosure crisis that followed drove much of this growth, as foreclosed families met their housing needs by renting the kinds of single-family homes they may have otherwise purchased. Even as the recovery has progressed, many of these families may still look to the flexibility provided by rentals as they move for new jobs or other opportunities. This continued demand is a welcome development among investors who bought huge numbers of distressed single-family homes at a steep discount during the recession and subsequently converted them to rentals. Additionally, while the Great Recession forced many Americans to move in with roommates or family, the recovery is now causing these doubled-up households to unwind. And while many of these new households will look to buy a home, it’s likely that many more – particularly younger new households – will look to rent as a middle step before buying a home, further boosting rental demand. Finally, and perhaps paradoxically, high rents themselves could be driving a surge in rental households. These high rents make it very difficult for many would-be buyers to save up for a down payment on a home, keeping them in rental housing for longer than they otherwise may have been were rental growth not as high.
The bursting of the housing bubble left many Americans with the painful lesson that homeownership is not the best option for everyone. But renting is not the best choice for everyone either. A housing market driven entirely by renters is no more sustainable than a housing market driven entirely by owners. In more normal times, we would expect to see more balance in the mix between new owners and new renters.
Still, much has changed over the past nine
months. By most expectations, housing markets will further normalize over
the coming year, boasting a better mix of renter and owner households. However,
given the dystopic experiences of the past two decades, it’s still tough to
tell what that mix might look like.
Considering all the facts and historical low interest rates and stable house pricing it’s the time to buy a house.
Considering all the facts and historical low interest rates and stable house pricing it’s the time to buy a house.
Call me today to find out how much your house is worth. 909-827-1237
No comments:
Post a Comment