Real estate marketplace Zillow has an interesting take on the current affordable housing crunch. In a recent release, they say that the boom in single-family rentals has contributed to a crunch in affordable housing inventory for-sale, which has limited options for lower & middle-income buyers. They report that the number of single-family homes that are rented grew by 5 million between 2006 and early 2017, and that these homes tend to be in the less expensive end of the housing market. They cite analysis showing around 270k fewer homes are sold each year compared to 2006, or about 5% of the homes that would sell in a typical year and that around 120k of these lost sales were among the most affordable homes – thus, limiting options for first-time buyers.
Key takeaways:
- Across the US, starter homes are slightly more likely than more valuable homes are to be rented out.
- After steadily increasing over the past decade, the share of single-family homes that are rented edged slightly lower to 18.9% in early 2017, down from a high of 19.2 in 2016.
- Rental houses purchased in recent years are more likely to be affordable starter homes than those purchased before 2006.
“For the past 10 years, the number of single-family homes that are rented has grown steadily and remains near the highest levels ever recorded,” said Zillow senior economist Aaron Terrazas. “The combination of foreclosures and growing rental demand following the housing crash was an attractive opportunity for investors – large and small – who were able to buy foreclosed homes and use them to meet the rental demand. At the same time, many long-time owners have opted to hold onto their homes as rentals even after they decide to move somewhere else. With such a large portion of single-family homes being rented out, and with new homes being built more slowly than the market needs, home values will continue to rise, particularly among the most affordable homes with the highest demand.”
Click here to read the full report on Zillow.com.
