Month after month, data comes out affirming the rising demand for rental units, and like the wider world of real estate, fresh and unusual details often accompanies it.
A recent Wall Street Journal piece on the rent/homeownership dichotomy has presented a most interesting example – currently, there are more houses for rent than there are apartment buildings.
Basing its findings on a new study of Census Bureau data by CoreLogic economist Sam Khater, the Journal reported that 20.7 million rentals are in one-to-four unit homes, compared to 17.1 million rentals in building with five or more units – and it’s only going to grow more lopsided as time goes on, with more and more renters opting to remain in single-family homes similar to the ones they lost to foreclosure, according to a Federal Reserve Board study from 2011 (homeownership just hit its lowest level since Gallup began tracking the data in 2011).
“Multifamily construction really boomed in the ‘70s and ‘80s, and single family boomed in the last decade, but that was mostly for owners,” Khater said in the Journal piece. “I do think single-family rentals have been around 50% of the rental market for a while now, but the pendulum has definitely swung towards that part of the market, especially in the hardest-hit areas.”
According to the Journal, stats like this are the “talk of the town” for Wall Street investors because they demonstrate a new, untapped demand for single-family rentals, one that the foreclosure crisis, and the millions of cheap homes it has created, could potentially supply. And the single-family rental market is big – Khater estimated in his analysis that the market is now at $3 trillion, and average yields are at around 8.6 percent
“What large investor wouldn’t want to take a few chances?” the article asks.
This means interesting things for Houston’s relatively thriving single-family housing market. Though the city was nowhere to be found in RealtyTrac’s latest report on foreclosures (which we’ll be covering with more depth later today), there are still certain pockets of the Houston market that have not escaped the foreclosure bug, as RealtyTrac’s more specific map for Houston shows. So perhaps, in sections such as 77047, 77044, 77049 and 77083, where the foreclosure rate has risen to more than 1 in every 400 homes, single-family rentals could become more of a fixture? And, as we’ve reported before, if demand does respond as the Journal anticipates, could that make home ownership all the more appealing?