Here are some highlights from the Joint Center for Housing Studies of Harvard University’ 2014 State of the Nation’s Housing report:
“A variety of household types has shifted to rentals in recent years. Along with the groups that are most apt to rent—younger adults, low-income households, and single persons—many older households, higher-income earners, and families with children also contributed to the growth in renters. For example, while households under age 35 accounted for a quarter of renter growth in 2005–13, the share for 55–64 year olds is nearly as large (Figure 23). This reflects both the movement of the baby-boom generation into this age group and the drop in homeownership among these households. Meanwhile, households aged 35–44 and 45–54 each accounted for nearly a fifth of the growth in renters, driven largely by their sharply lower homeownership rates.
With the continued strength of demand, the national rental market tightened further in 2013. According to Census Bureau estimates, the rental vacancy rate edged down to 8.3 percent and stood at its lowest point since 2000. Even so, last year’s decline was the smallest since vacancies began their retreat in 2010. Meanwhile, MPF Research reports that by the fourth quarter of 2013, the vacancy rate for professionally managed apartments was 5.0 percent, virtually unchanged since late 2011.
Rent increases have also remained fairly consistent. The consumer price index (CPI) for contract rents indicates that nominal rents were up 2.8 percent in 2013, little changed from 2012. Among professionally managed properties with five or more units, rent increases slowed from 3.7 percent in 2012 to 3.0 percent last year. But by either measure, rents still rose at a healthy clip, outpacing the overall inflation rate of 1.5 percent.
Although multifamily production has picked up substantially, newly constructed units have met just a fraction of the recent growth in renter households. From 2006 through 2012, multifamily completions totaled 1.6 million units while growth in renter households hit 5.2 million. While excess vacant units from the building boom helped to meet the surge in demand, conversions of owner-occupied single-family homes to rentals provided most of the new supply. Single-family homes have always made up a significant portion of the rental housing stock, but the recent increase is remarkable. The American Community Survey reports that the number of single-family homes rented during this period increased by 3.2 million, roughly twice the number of new apartments added, pushing the single-family share of all rentals from 30 percent in 2006 to 34 percent in 2012 (Figure 26). ”
To view Harvard University’s full report, click here.