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Rental Market Hit New Highs in June

by Tim Hart

Rental prices continue to grow in the United States Housing Market making many wonder when and where the tipping point may come. The national effective growth rate for rental values went up by 5.1% in June to a 47 month high. Effective rent growths have also been at 5% for 5 consecutive months, a streak not seen since April 2009.

Tight occupancy has pushed rent even higher as the intense competition has allowed landlords to consistently raise rates while still finding tenants. The US rental occupancy rate now sits at 95.3 percent. Although renters have struggled to keep up with the recent price growth, they’ve still made the payments work—but for how long renters can afford these high rates is to be seen.

The US Housing market may be catching up from the housing recession, when a very small number of apartments were made. Now, renters can only hope the recent economic growth will help builders increase home inventory and drive landlord competition to lower prices. Even despite low mortgage rates, the rising home values have kept many renters away from buying a home. Oddly, buying has been cheaper than renting in 66% of the national housing market, yet renters continue to pay steep prices for a place to stay.

In Bozeman, the local real estate market has acted as a sort of microchasm for trends seen in the US housing market. Bozeman continues to try to add additional inventory to keep rent prices low and have also looked into lowering lot sizes to increase the number homes they can build on a space of land.

 

Source: http://realtormag.realtor.org/daily-news/2015/07/27/booming-rental-market-sets-new-records

 

Renters across the United States have been struggling to deal with rising rental prices and now 1 in 4 uses at least half their income towards their rent and utility bills. Sometimes, this kind of statistic may be warped due to the high percentage of Americans living in sought after cities like New York and San Francisco. But it’s not just a few states that are pulling down the nation. Minus Alaska, South Dakota and Wyoming, every state had at least 20% of its residents using more than half their income to rent.

In census data taken by Enterprise Community Partners, the number of renters who felt some form of strain from growing home expenses has grown 26 percent since 2007. That’s 11.25 million additional home renters.

Income rates have not grown at the same pace as rental rates, making it one of the key factors driving rental affordability. Income for renters only grew at 11% in the last 5 years whereas rent has risen by 15% on average over the same time period.

Another factor has been that vacancy rates have been falling for rentals since 2013. At the start of 2015, rental vacancy was at 6.93%--far lower than the 10.9% vacancy rate seen in the third quarter of 2013. In Bozeman specifically, rental rates were effectively zero at the start of Fall semester for Montana State University in 2014.

Renting continues to be an issue for the United States, Montana and the Gallatin Valley alike. Hopefully, more than a few of these renters will be able to transition to homeownership, helping free up rentals for others while lowering the demand.

 

Source: http://realtormag.realtor.org/daily-news/2015/05/04/more-renters-are-in-financial-trouble

http://realtormag.realtor.org/daily-news/2015/03/17/why-renters-may-be-in-trouble

http://eyeonhousing.org/2015/04/homeownership-rate-falls-below-64/

 

Rental Vacancy at 20-Year Low in US

by Tim Hart

The nation is still looking for room to rent. The national vacancy rate for rented units has dropped to a 20 year low. The rate has not been this low since the Fourth Quarter of 1993.

Bozeman, Montana has seen these lack of vacancies first hand, thanks to a growing town and surrounding area, schools and university. Bozeman has preemptively added additional housing and even built new subdivisions to better address the rental needs in the area, though it is yet to be seen whether these changes will improve the vacancy rate compared to 2014.

In the US in general, rising rents and a small supply of rentable properties should help renters facing affordability issues transition to homeownership. Currently, the homeownership rate has been falling and has hit a point not seen since 1994. However, as mortgage rates have dropped, as the FHA has lowered mortgage insurance rates, and as mortgagees have began offering lower down payments, most believe that household formation should pick up its pace.

Many millenials, who had not been transitioning to homeownership, may now be able to jump in as buyers, not renters, especially with improvement in the labor market. First time buyers only hold a 29% share of the housing market, well below the average of 40 percent. As the economy has improved, several experts believe that these buyers will now do just that—buy.

Homeowner vacancy rate is low at 1.9 percent. Builders have shown increased confidence that they will have a buyer for their new construction.

Although the low rental vacancy rates have caused some issues throughout the country, the market has left positive hints at what could be in the future. The homeownership market could see big changes this year, as many renters will have to decide to buy or keep renting.

 

Source: http://eyeonhousing.org/2015/01/rental-vacancy-rate-at-20-year-low/

 

 

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