The recent surge in demand for rental living in the U.S. won’t just be a 2016 story, according to researchers at the Urban Institute, and housing experts expect that the costs of renting will continue to increase. Here’s the story from Andrea Riquier of MarketWatch.
Demand for rental housing, already elevated in the aftermath of the financial crisis, is only going to grow. That’s going to pressure prices even higher.
More than 1.25 million new households will be formed in 2016, as the economy and job market heat up, according to CoreLogic Chief Economist Frank Nothaft. That’ll take place even as rental vacancy rates hover near 20-year lows, Nothaft wrote in CoreLogic’s 2016 Outlook for Housing.
From 2010 to 2030, there will be five new renters for every three new homeowners, they wrote in a June research report, and many of them will be cost-burdened, meaning they’ll spend more than half their incomes on rent.
The Urban Institute warns of “tough times ahead” for renters. Urban’s analysts believe there will be 6.5 million more renter households in the next ten years, and what it calls “cost-burdened” renters will grow to nearly one-third of the total, or 4 million.
That assumes rents rise about 3% annually as incomes grow 2%. The cost of rent has risen 3.7% in the last twelve months, and wages, adjusted for inflation, have grown 2.4%.
