With potential home owners finding it tough to buy their first home, there is still strong demand for rental units, judging by rental price trends. REALTORS® reported rents that are higher compared to a year ago.
Rising rents add an additional incentive for homeownership. Homeownership provides families with enhanced lifestyles—and a chance to cap major parts of their living costs.
What does this mean for REALTORS®? Homeownership advantages for discussion with clients include housing costs (generally less owning a home), quality of life for the family, continued relatively low mortgage rates, and home affordability. Rents continue to go up, and at the end of the lease the renter has a stack of rent receipts as the final product.
As of 2012, the foreign-born population accounted for about 13 percent of the total U.S. population, up from only about 5 percent in 1960. What are the prospects for homeownership of the foreign born? Data indicate the majority of the foreign-born become homeowners. Foreign-born home ownership is at par with the homeownership rate of native-born U.S. citizens.
The prospects for home ownership of the foreign-born are bright because they are generally well-educated and comparably earn higher incomes.
What this means to REALTORS®: Increasing contact with the foreign-born is becoming more critical given the increasing presence of the foreign-born and their sound prospects for home ownership. Information on the characteristics of the foreign-born is available at http://www.realtor.org/reports/state-by-state-international-business-reports
The demand for rental units appears to remain strong, judging by rental price trends. Approximately half of REALTORS® responding in the REALTORS® Confidence Index Survey reported higher residential rents compared to 12 months ago. About 23 percent of REALTORS® reported conducting an apartment rental.
There have been reports that Millenials (the generation born approximately 1978/9 and subsequently) may be unable or unwilling to participate in homeownership to the same degree as previous generations–based on tough job markets and higher levels of student debt. This conclusion is not substantiated by a recent survey—but the Millenial generation is still evolving in preferences and age. In the July REALTORS® Confidence Index survey, approximately 52 percent of transactions went to clients aged 35-55 years old. Those aged 20 to 34 and under (that part of the Millenial generation currently of home-buying age) accounted for 26 percent of reported sales and numbered 28 percent of the over age 20 population.
Approximately three to four percent of REALTORS® report a commercial rental every month. On an annual basis, this would be in the neighborhood of 175,000 rental transactions per year. In addition, approximately three percent of REALTORS® report a commercial sale.
According to the Commercial Real Estate Quarterly Market Survey, rental volumes are up by three percent on a quarter-over-quarter basis. Rental rates are down by two percent, although the level of downward pressure has been decreasing. For sales, volume is up by 11 percent, with prices down 3%.