Will Renters Really Lead The Housing Recovery?
In a recent report about the shifting nature of U.S. housing demand, analysts predicted that housing demand would continue to lag until 2015 while renting increases until rental prices reach their peak. According to the report three things need to happen before home buying makes a comeback, 1) home prices need to actually begin to increase 2) homeownership needs to be cheaper than renting and 3) credit needs to become more readily available. It makes sense, but it can also be argued that in some cases all three of these things are already happening.
Renters in certain communities are experiencing an increase in leasing prices as more people rent instead of buy. Also, many renters are considering their home buying options as they realize the long-term negatives of renting. In an effort to profit from the temporary shift to renting, investors are buying and renting out properties for a few years. But despite this temporary shift to renting, most Americans still see homeownership as a viable goal according to a survey in the housing report.
“Over 80 percent of Americans in recent surveys still agree that buying a home is the best long-term investment they can make. What will be intriguing to watch is how their aspirations around home ownership are affected by this period of extended austerity,” said Bart van Ark, chief economist at The Conference Board and co-author of the report.
Ark’s extended austerity prediction may be slightly premature. In many states the unemployment rate has declined and jobs have begun to return. And as interest rates begin to stabilize many renters may find it easier to get mortgages. For those renters who are first-time homebuyers, mortgages targeted to their demographic are still plentiful.
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