Renting a Home: It's a Great Time Not to Own
According to U.S. Census data, over 2 million people between the ages of 20 and 35 either moved in with a roommate or took shelter with family since 2005. With the addition of 874,000 jobs since last December researchers suggest that these people are ready to venture back out on their own, contributing to a surge in demand for apartments and other rental property.
There are other signs of rental market vitality including continued strong developer deliveries for new apartments, refinances to allow for improvements to current multi-family projects, low interest rates, falling vacancy rates and climbing rental rates... which are expected to increase by 2.6% in 2011 according to many analysts.
The government has even shifted its party line from the 'American Dream of Homeownership' to the 'American Need for Sustainable Housing.' Even the GSE's Fannie Mae and Freddie Mac are offering competitive terms for many multifamily housing projects creating credit and liquidity for the rental market.
Further consider the huge volume of involuntary foreclosures and the displaced homeowners they create, a steady number of people walking away from their mortgages because they owe far more than their
These consumers won't be reentering the residential purchase market anytime soon either, since restoring damage to ones credit bureaus often takes years to complete... so, a stronger economy with improving unemployment numbers would likely further bolster the rental sector before any meaningful impact is felt in the residential market.
Qualifying to buy a home remains increasingly difficult due to stringent underwriting guidelines and homeownership offers diminishing value even for well qualified borrowers. With no end in sight for flat or depreciating residential property values, the proposed end to certain tax benefits for homeownership, an improving quality of rental inventory and the low-maintenance convenience factors of renting an apartment make the choice a far more attractive option to buying for most consumers.
Almost every tangible and intangible indicator, from economic to psychological, point to a robust rental market going forward. America is clearly becoming a renter nation with potentially 10 million new applicants entering the market. So lock in your rental rates now before they begin to increase to meet the growing (and growing) demand.
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