As the residential mortgage lending continues to decrease, the demand for apartment and houses for rent are increasing tremendously. The massive decline on mortgage approvals is one of the major factors regarding the huge demand for apartments and houses for rent.
The rental housing supply is not keeping up with the demand. Affordability is an issue that will be exacerbated by growing demand. The concern is that apartments and houses for rent absorb more than thirty percent of a renter’s income.
Positive job growth is also boosting the demand for apartments and houses for rent. The responsibilities of homeownership are expensive, and the cost of living continues to rise. Therefore, many people prefer not being tied down to home ownership and be free to move when a better job or place comes along.
A housing report released by a national housing search engine, found that rental prices for two-bedroom units grew 3.75 percent. Vacancy rates are steadily falling. Leasing is on the rise, and rents are showing signs of strengthening, especially in the apartment market where rents are increasing the fastest. Rents are rising; vacancies are falling; household formations are growing, and apartments and houses for rent supply are limited.
A recent study by Chicago-based risk-management information firm, Trans-Union, found that landlords recognize the fact that many people cannot shoulder a rent increase at this point. Steve Roe, vice president of sales for Trans-Union, said that if you look at a wage growth and job growth, and landlords are taking advantage of that where they can, but in many other cases, the landlords recognize that this cannot be done. The tenant base cannot afford it.
Here are some of the main reasons why people prefer apartments and houses for rent:
• In many area’s apartments and houses for rent are still very affordable. This is one of the main reasons why people prefer apartments and houses for rent.
• The fact that one is not responsible for maintenance adds to the desirability of rentals.
• When relocating, a homeowner can face challenges, such as selling the old home and buying a new one. Apartments and houses for rent provide one the opportunity to move from one location to another.
The Bipartisan Policy Center, Demographic Challenges and Opportunities for U. S. Housing Markets, found an increasing demand for apartments and homes for rent as Baby Boomers and Echo Boomers postpone home ownership. This report covers economic conditions and the effect of it on future demand for apartments and houses for rent:
• The report stated that there is a significant increase in demand for apartments and houses for rent as the household formation changes.
• There are fewer married households, more singles and more seniors needing services.
• It is found that the Echo Boomers have more debt and experience more difficulty in purchasing a home. This has an impact on demand for apartments and houses for rent.
The Key Harvard Report findings include that after devoting more than half their monthly outlays to rent, families with children in the bottom expenditure quartile on average had only $593 left to cover all other living costs. The cost burdens for rentals and housing nearly doubled from 2001 to 2009. The Key Harvard Report found that housing recovery will require renewed household growth. The report also mentioned that the ongoing losses of affordable housing contribute to affordability challenges.
Rental data provided by Dupre & Scott Apartments Advisors states that the distribution of apartments and homes for rent payments by jurisdiction is based on the housing unit estimates by the Washington State Office of Financial Management. One of the key findings was that the percent of market rental units in Seattle affordable to households earning 80% of median income-rental costs less than $1,405.
Housing affordability is based on the median household income as taken from the Community Survey. The indicator assumes that a home price is considered affordable when more than 30 percent of monthly income is expended on housing costs, which includes both a mortgage payment and other housing costs such as utilities.
Rents are rising; vacancies are falling; household formations are growing and apartments and houses for rent supply are limited, but in many area’s apartments and houses for rent are still very affordable.