With U.S. unemployment at 8.2% and the rise of home foreclosures, more and more Americans have given up on the idea of owning their own homes and have moved towards rental properties instead. This shift is dramatically remaking the U.S. housing industry, as we know it.
According to Gallup, 62% of Americans say that they own their own homes in 2012, compared to 68% the previous year. This marks a new low since Gallup began the study in 2001.
In a recent report, Oliver Chang, an analyst at Morgan Stanley, called 2012 “The Year of the Landlord,” because rents are rising, vacancies are falling, household formations are growing and rental supply is limited. He believes that the demand for rental properties will continue to grow in the upcoming year.
Some reasons for the rise in rental properties:
It has become harder to borrow money from the bank because they are looking for much better credit than they did in the past.
Banks are requiring that people use more money on down payments. This turns people off from buying homes.
People used to think that real estate would go up forever but now properties are constantly going down. It becomes harder for people to sell their own homes for the price they desire, which in turn makes it harder for them to buy another home.
Often when figuring out what costs more renting vs. buying. It is often cheaper to rent than it is to buy.