Has Renting Become the New American Dream?
If you have wondered if buying a home is right for you, think about this simple phrase “Everybody has to live somewhere” and this is true, and this question naturally leads to the next; “Where do you want that somewhere to be and at what cost?”
While some people are perfectly happy to rent others are content living in their parents basement but if that’s not your idea of grown up living or if like so many people I talk to you are concerned about the rising cost of the basics like food, clothing and shelter due to the continued devaluation of the dollar then consider this.
During the housing bubble, homeownership rates increased from 66% to 69%, an all-time high. Today, that number is just below 65%, according to Morgan Stanley researchers Oliver Chang, James Egan and Vishwanath Tirupattur.
Analysts expect this will decline further to 59.7%, driving multifamily vacancies down and rents up. The researchers derived this estimate by taking the number of delinquent homeowners likely to be foreclosed, and moving them into the rental category.
a Lack of Affordable Rental Units
According to a recent study from the Harvard Joint Center for Housing Studies 26 percent of renters or 10.1 million people spent more than half their pre-tax household income on rent and utilities in 2009. That’s because incomes slipped dramatically from their peak at the start of the decade because rents kept rising to keep pace with inflating housing bubbles.
[VIDEO] Harvard Study Show Shrinking Availability of Rental Units [VIDEO]
There is a crisis of rental housing – they have seen biggest increase in worse case rental housing needs in the history of looking at those numbers from 2007 -2009.”
Secretary of Housing Urban Development Shaun Donavan
One would think that with declining housing prices that rents would also decline right? Perhaps yes, but housing prices didn’t decline in a vacuum, they declined commensurate with the employment rate and as anyone who has been blessed to have kept their jobs will tell you, there has been very little wage increase during the past 4 years or in some sectors like Realtors, lenders, construction workers, hotel and restaurant and manufacturing who have seen their wages decline during this period.
Multifamily, many will say, offers the best risk-adjusted return in the market compared to office and retail,” Scofield said. “And real estate is a great hedge against inflation.”
– Jim Scofield, CEO of the Raleigh real estate company Apartment REP. Read more
Inflation is the intended unstated goal of government
Two Presidents from two political parties have attempted and failed to re-inflate real estate prices. Eventually with the continued erosion of the US Dollar it will work, when exactly is the question.
So what then is an average person to do? Should you move back into your parents basement? Take on a roommate like in college?
Perhaps this will work for some however most people of a certain age who have the highest need for housing between the ages of 25 and 44 will probably find the latter options simply too unpalatable.
Just last week I spoke with a client who although he only intends to remain n Raleigh for the next 3 – 5 years has decided to buy instead of continuing to rent because as he says;
In only two and a half years the bastards have raised my rent from $750 per month to $1,000 and I just can’t bear the thought of throwing away another $36,000!” Raleigh Renter
With housing in Raleigh being at it’s most affordable since 2004 – and interest rates trending ever lower, there may never be a better time than now to buy a home!
The Triangle is considered one of the better apartment markets in the United States because of its growing population and a university system that produces a steady stream of renters.
The apartment vacancy rate in the Triangle was 6.7 percent in March, down 1.9 percentage points from a year earlier, according to TAA and Karnes.
Average rents in March were $827 per month, up $22 from the same period a year ago.
- Social Benefits of Homeownership(theRaleighMortgageGuy.com)
- Gold, Guns or Real Estate (theRaleighMortgageGuy .com)
- Hedging Against Inflation and Risk (theRaleighMortgageGuy .com)
- Raleigh – It’s NOT a Buyers Market! (theRaleighMortgageGuy .com)
- Housing; is it still the best Investment for Americans? (theraleighmortgageguy.com)
- Fannie Mae: Consumers Expect Declining Home Prices, Rising Rents