The Lowdown on the Rental Market

A couple of days ago the friendly academics at Harvard University's Joint Center for Housing Studies released a report on the state of America’s Rental Housing: Meeting Challenges, Building On Opportunities. We read through the 56 page document and pared it down to three areas that reveal the current landscape of rental property ownership and tenancy. Fascinating really.

SUPPLY and DEMAND
• Easy credit enabled renters to purchase homes which raised vacancies and pushed rents down. This downtrend was further exacerbated when the financial recession reduced renters income.
• The housing recession, partially due to easy credit, led to a rise in foreclosures increasing the amount of people looking for rental units.
• The increased demand has slightly turned up rental rates.
• In the past decade the total number of renters has increased by 2.2 million.
  
  

INCOME and HOUSING
• Overall, renters are now now paying a higher percentage of their income to rent.
• The availability of low-income housing is shrinking as property owners retrofit or convert their buildings to other uses.
• 28% of low-income ($400/month or less) housing stock was lost between 1999 and 2009. 
• Over the past decade, the number of low-income households has grown as the supply of low-income housing has been shrinking.
• 16% of the total rental housing is subsidized.
• With a tightening of federal and state funds new investment and efficiency improvements in low-income housing will decrease.
  
  

CHARACTERISTICS of RENTALS
• The total rental housing stock is older than it has ever been with a median age of 38 years.
• Almost half of the rental housing is single-family homes or 2-4 unit buildings.
• Individuals own 55% of the total rental housing market but more than 80% of 1-4 unit buildings.
• From 1999 to 2009 the share of new rental apartments in buildings with 4 or more stories rose from 10 to 35%. Infilling developed pockets is increasing greater than building sprawl housing in suburban areas.
• The conversion of detached single-family homes from primary home to rentals doubled from 2005 to 2009.
• The housing crisis has lowered multifamily property values as much as single family homes.

To summarize our review of the most relevant information from the report: Rents should be turning up due to greater demand. Low-income housing is shrinking as people pay more for rent. The growing renter base is a predominantly young with over 60% of renters under age 35. As the housing slump continues to keep property values down, the rental market will see additional homes converted to rentals. The low values will also discourage rental owners from selling and stimulate interest in new development.

This is the time during a recovering and predominately young market to re-invest in your property with energy efficient and green improvements to attract eco-conscience tenants.