Friday, December 15, 2017. Single-family home rentals on the rise
A boom in single-family home rentals is contributing to a crunch in the inventory of affordable housing, limiting options for lower- and middle-income buyers nationally, according to the latest report by Zillow.
The online real estate data company reports the number of single-family homes being rented grew by 5 million nationally between 2006 and early 2017. The rental homes tend to skew toward the less expensive end of the housing market.
In San Diego County, 25.1 percent of single-family homes are currently being rented with 27.1 percent of them occupying the least valuable third of the market, according to Zillow. More than 36 percent of the rental homes are in the middle third of the market.
Nationally, approximately 270,000 fewer homes are sold each year than were sold in 2006, or about 5 percent of the homes that would sell in a typical year, according to Zillow. About 120,000 of these lost sales were among the most affordable homes, which are often sought by first-time homebuyers.
“As owners lost their homes to foreclosure following the housing crisis, the renter population grew rapidly,” Zillow stated.
The share of single-family homes being rented jumped from 13 percent in 2007 to a high of 19.2 percent in 2016, according to the real estate firm.
Demand for single-family rentals remains strong — 45 percent of renters would like to rent one — but only 28 percent can actually find a single-family home to rent, Zillow found.
“For the past 10 years, the number of single-family homes that are rented has grown steadily and remains near the highest levels ever recorded,” Zillow’s senior economist, Aaron Terrazas, said in a statement. “The combination of foreclosures and growing rental demand following the housing crash was an attractive opportunity for investors — large and small — who were able to buy foreclosed homes and use them to meet the rental demand.
“At the same time, many long-time owners have opted to hold onto their homes as rentals even after they decide to move somewhere else. With such a large portion of single-family homes being rented out, and with new homes being built more slowly than the market needs, home values will continue to rise, particularly among the most affordable homes with the highest demand.”
The Zillow report found millennials are the largest group of buyers in the housing market, and they are driving up competition for less expensive, entry-level homes.
And in the past five years, the homes that are being converted to rentals are increasingly the same affordable homes that first-time buyers are after.
Almost 40 percent of rented single-family homes bought since 2012 are among the most affordable, compared to 34 percent of single-family rental homes that were bought before the housing market crash, according to Zillow. By Daily Transcript Staff Report