Renting at a 50-year High
There have been many predictions over the past few years about where the rental market was headed. After the 2006 recession home buying slowed and renting increased causing rental prices to increase across the country. This past April, after years of rental market growth it was predicted that home ownership was set to rise as new household ownership began to outpace new renters. However, a new Pew report surprised many as it reported that in 2016, 36.6% of households rented which is close to the 1965 renting percentage high of 37%. The growth in the renting market has been consistent over the past ten years as the numbers of renters grew by 7.6 million while home ownership was stagnant.
One of the relevant findings of the report was that many of the factors that have led to the stagnant housing market over the past ten years including rising home prices, fears from the last housing crash and large student debt only appear to be getting worse. Student debt might be a large factor as to why millennials are 8% more likely to rent than individuals the same age ten years ago. As student debt is increasing every year, it is likely that the demand for rentals will continue to increase among 22-30-year-olds as they choose this option over buying homes.
Also, rental rates among those 45-64 years old also rose by 6% in the last ten years. Furthermore, all ethnic groups were more likely to rent in 2016 than ten years ago. It is important to note that 72% of renters would like to buy a house at some point and that 65% of people say they only rent because of circumstances compared to 32% that said they rent by choice (source).
This report may indicate that the predicted fall in rental demand may not come to fruition. Renting rates appear to be rising while homeownership appears to be staying stagnant, a trend that is unlikely to change anytime soon and may even put pressure on rental prices to increase in certain high demand areas.
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Disclaimer: The information provided in this post not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting local, state, federal or provincial tenancy laws.