Freddie Mac released today its U.S. Economic and Housing Market Outlook for October showing that the rental market is doing well with many of households under 30 are opting for renting vs buying. This is pushing the new households into “new renters” while adding no New Home Buyers.
If you have been reading this blog for a while, you will notice we have covered this in a bunch of posts. (pent up demand). Although there is really nothing new, this is still a nice national perspective summary from the big picture.
“Much of the rental demand is from young and newly formed households who have decided to postpone homeownership in favor of renting during unsettled economic times. Indeed, the decline in the homeownership rate has been sharpest for those household heads under 30 years of age: While the U.S. homeownership rate has fallen about 1.5 percent over the past year (from 66.9 percent to 65.9 percent during the second quarter of 2011), owner rates have fallen by 4.4 percent (to 21.9 percent) for those under 25 years of age and by 7.0 percent (to 34.7 percent) for those aged 25 to 29 years,” said the Frank Nothaft, Freddie’s chief economist.
- Over the year ending mid-2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing, a 4 percent rise in the number of tenant households in just one year.
- The U.S. homeownership rate has fallen about 1.5 percent over the past year (from 66.9 percent to 65.9 percent during the second quarter of 2011) with owner rates falling by 4.4 percent (to 21.9 percent) for those under 25 years of age and by 7 percent (to 34.7 percent) for those aged 25 to 29 years.
- Apartment rents, which had been flat to falling in many projects during the 2008-2009 recession, have begun to rise, albeit slowly.
- New construction starts of apartments in buildings with at least 20 dwellings has picked up this year, and in the second quarter was the highest since the end of 2008.
- Ten-year constant-maturity Treasury yields averaged 1.98 percent in September, the lowest monthly average since the Federal Reserve’s series began in 1953; these yields are a common benchmark for multifamily mortgage rates, and suggest that mortgage rates fell to new lows for multifamily lending in recent weeks.
I believe if we can turn enough of the economic corner to allow these under 30 renters feel confident enough in their employment, they could enter the market and turn this housing market around in no time. Sometimes I even wonder if we won’t be coming out of this down cycle straight into a housing boom as so many years of these first time homebuyers have been stuck into renting. Time will tell.
- It’s Time to Buy That House (online.wsj.com)
- Twin Cities Real Estate Market Pent up Demand (craigkamman.wordpress.com)
- The Explosion In The Number Of Renters Could Help Save The Housing Market (businessinsider.com)