The NYU Furman Center released its annual National Rental Housing Landscape report for 2017. The study focuses on the 53 US metros with over 1 million people, analyzing trends between 2006 to 2015 with a focus on the economic recovery period starting in 2012. It contains a lot of information, so here is your cheat sheet of key points for residential real estate investors:
- Median rents have grown faster than inflation essentially everywhere.
- Nonetheless, due to household income increases, the number of rent burdened households has actually decreased between 2012 and 2015. However, the percentage of income devoted to rent (rent burden) is higher than back in 2006 and far higher than in prior decades. The number of units available that are considered affordable to local median income has been steadily falling.
- The number and percentage of renters has increased substantially and in essentially every metro. The increase in renter share was largest for higher socioeconomic households (demonstrating a partial societal shift toward optional convenience, flexibility, and mobility options that renting provides). Renters in general still have lower income and education than non-renters.
- Rents for recently available units were higher than average occupied units of the same type. This means that people are incentivized to stay in place, since moving will generally cost them more. This can also be skewed by upgrades at tenant turns, and higher quality units coming available.
- About 1/3 of renters live in single family homes, and 2/3 in apartments.
- Rental vacancy rates have continued to decrease, even with new inventory on the market.
For investors, this points to continuing demand and supportive societal shifts. Other more recent studies do show that some millennials are now more actively considering home ownership, especially as they marry and have children. So, the factors ebb and flow, though the overall rental demand and outlook remains strong.