Decline in Homeownership, Leads to Rush in Apartment Rentals

Miami, Fl -- With an increase in foreclosures, U.S. apartment proprietors are seeing a reduction in homeownership’s and a boost in rentals due to young adults finding their own places to live.  According to MPF Research, the number of occupied apartments increased by 215,000, almost twice the amount of units added in 2009 and the most since the company began tracking the data in 1992.  The vacancy rate has declined nearly 1.6% from 8.2% in December.

Investors are hoping that this expansion of young renters will lead to increased earnings next year of about 5 to 10% of real estate investments.    With the economy recovering from the worst recession since the 1930s, the biggest driver in apartment occupancy are new jobs.    According to the Labor Department, employers have been hiring an average of 147,000 jobs a month since the beginning of 2010. 

Financial support didn’t improve fast enough for homeowners to prevent more than 1.65 million foreclosure filings.  RealtyTrac Inc., a data company said on July 15 that a record 269,962 US homes were seized in the second quarter as lenders set a pace to claim more than a million properties at the end of 2010.  The US Census states, that the US homeownership rate fell to 67.1%

 “As homeownership continues to decline, people need to live somewhere,” said Henry Cisneros, who was President Bill Clinton’s housing secretary from 1993 to 1997 and is executive chairman of CityView, a real estate investment firm in Los Angeles that focuses on urban projects including apartments.

The rental market will be flourishing for the next few years.  Rents may increase from 4-6% in both 2011 and 2012, compared with 2% this year.  Landlords won’t be able to raise rents too aggressively because unemployment remains high at 9.5 percent and declines in home prices have made it no more expensive to buy than rent in about half of larger markets around the nation.  Expect significant rent growth by 2012 as supply tightens.

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