Category Archives: Rental Market News
Zillow report: Many homeowners still dealing with mortgage issues
Despite recent improvements in the housing market, many current homeowners are still in financial trouble with their mortgages.
According to the first quarter Zillow Negative Equity Report, 31.4 percent of U.S. homeowners with mortgages are underwater, owing $1.2 trillion more than their homes are worth.
Of the 16 million homeowners underwater, 40 percent owe between 1 and 20 percent more than their homes are worth and 15 percent owe more than double the value of their home.
“While it was disappointing to see negative equity numbers remain so high, it is important to note that negative equity remains only a paper loss for the vast majority of underwater homeowners,” said Stan Humphries, chief economist at Zillow. “As home values slowly increase and these homeowners continue to pay down their principal, they will surface again.”
Recent legislation set forth in Congress could help underwater homeowners lower their rates. The Responsible Homeowners Refinancing Act could help as many as 3 million borrowers save up to $3,000 a year by refinancing at low rates.
Alternatively, if you don’t want to get yourself into a financial mess with an expensive mortgage, renting your house is a viable option. Rental demand remains high nationwide despite low home prices and mortgage rates.
The Demand Insitute: Rental Demand Leads Housing Recovery
According to a newly released report from The Demand Institute, the “worst of the housing crash is over and a recovery has now started.” Research indicates that average home prices will rise “1 percent in the second half of 2012.” However, unlike previous housing recoveries, this one will be lead by buyers of rental properties. Real estate investors—who accounted for 27 percent of all home sales in 2011, according to the National Association of Realtors—are hoping to cash in on the 50 percent of those who say they intend to rent, rather than buy, when moving within the next two years.
The report, titled “The Shifting Nature of U.S. Housing Demand,” indicates that demand for rentals will be lead by those hit hardest by the current recession—young people and immigrants. At the same time, many of those who “left the housing market because they defaulted on loans” will likely remain renters for the next several years while their finances recover.
While housing prices have dropped significantly from 2005 to 2012, strong demand for rentals has led median rental prices to rise by almost 20 percent during the same time period. The Demand Institute predicts that rent prices will continue to climb over the next several years—good news for landlords.
Some key stats from the report:
Rentership Nation
According to a recent Wall Street Journal article, rental housing is currently the one bright spot in a dismal housing landscape. The rental property values—for apartment buildings in particular—are skyrocketing, as rental vacancy rates drop and rent prices climb sharply. WSJ states that this sudden demand for rentals is driven largely by “millions of people who are victims of foreclosure or are unwilling or unable to buy their own homes.”
Even some of the cities hardest hit by the housing crisis and subsequent economic downturn are experiencing increased demand for rentals and corresponding spikes in rent prices. In fact, “Of the 82 major markets that Reis tracks, only Las Vegas [has seen] rents decline” year over year.
Industry experts predict that the national home-ownership rate could easily fall from the current 66.4% to 60% in the near future, with “Each 1% decline in the home-ownership rate [representing] the movement of one million households to rentals.”