Following nearly a decade of increased focus on rentals following the housing boom, the pendulum is starting to swing the other way, according to Zillow Senior Economist Aaron Terrazas. According to Terrazas’s analysis of data from the U.S. Census Bureau’s Homeownership and Housing Vacancy Survey, the decade-long surge in rentership following the housing crisis and recovery came to an end in 2016.
According to Terrazas, between Q4 2006 and Q2 2016, renters were the driving force behind new households in the U.S. In that time, the number of owner households nationwide fell by 1.76 million while the number of renter households increased by 9.72 million.
“But over the past two years, the trend has reversed and rentership has been on the decline,” said Terrazas. “From Q2 2016 to Q2 2018, the number of renter households has declined by 754,000 while the number of owner households has increased by 3.13 million.”
The decade-long renter surge was driven mainly by the foreclosure crisis, as foreclosed families were forced to rent what they may have otherwise purchased.
“Even as the recovery has progressed, many of these families may still look to the flexibility provided by rentals as they move for new jobs or other opportunities,” said Terrazas on the rental surge at its height in 2015. “This continued demand is a welcome development among investors who bought huge numbers of distressed single-family homes at a steep discount during the recession and subsequently converted them to rentals.”
Though the surge ended in 2016, recent home price increases have driven some potential buyers to rentals, at least until prices stabilize. A higher demand in rentals over the summer caused rents to increase in some cities as well, according to a report from RentCafe. RentCafe indicated that a higher than normal number of renters this summer, notably college students, as well as more rent renewals were possible causes of the higher rents.
Find the data from Zillow here.