Although access to purchasing a new house has been considerably limited over the past few years, as consumers and banks are reticent regarding new mortgages, there’s one business that’s thriving now. Realtors should say Thank God for rentals. According to an analysis by Reuters, the housing sector has been boosted by U.S. rental demand.
Real estate is still difficult for analysts to figure out and give estimates regarding its evolution throughout the next few years. However, while future projections are not that easy, putting together existent data is much easier and useful in depicting the actual state of the housing sector in the United States.
The Obama administration has been trying hard to find ways to boost the housing sector, but so far there’s not much of a change to write about. The U.S. congress has decided to offer incentives even for non-U.S. citizens to help them purchase a house in the $500,000 and up price range.
A thriving or at least at ease housing sector is essential for the U.S. economic growth, but so far coupled with an 8.6 percent unemployment rate, home foreclosures rising and property prices under pressure, consumers today are a lot more pragmatic. Instead of wasting years, time and money dreaming of owning a house, they turn to rentals.
Reuters points out this new change in consumers’ behavior is “a shift that is remaking the face of the U.S. housing industry”. The news agency writes that the percentage of those owning a home has dropped from 69.2 percent in 2004 to 66.3 percent in this year’s third quarter.
But, for people in the rental business things are going well: the percentage of empty rental properties dropped to 9.8 percent in Q3 from 10.3 percent one year earlier. The Reuters analysis shows that rental costs are up 2.4 percent over the last year, compared with an increase of 0.6 percent in 2010.
Oliver Chang, analyst at Morgan Stanley, explains: “Rents are rising, vacancies are falling, household formations are growing and rental supply is limited. We believe the demand for rental properties will continue to grow”.
Basically, economists and analysts are witnessing the start of the new boom in the housing sector: rentals.