Rentals expected to jumpstart housing market

A new class of renters is expected to bring a bright spot to the troubled U.S. real estate market. Prices for rental apartments are expected to rise nationally by approximately 4.5 percent in 2011 and up to another 3 percent in 2012, according to Fortune.com. Paying more to the landlord might be bad news for renters, but it could indicate that better days are ahead for the overall housing market.

May 26, 2011
rental market, housing market, rental housing

A new class of renters is expected to bring a bright spot to the troubled U.S. real estate market. Prices for rental apartments are expected to rise nationally by approximately 4.5 percent in 2011 and up to another 3 percent in 2012, according to Fortune.com. Paying more to the landlord might be bad news for renters, but it could indicate that better days are ahead for the overall housing market.

During the housing boom between 2001 and 2005, prices for rentals fell by nearly 10 percent because easy loans convinced would-be renters to buy a home instead. Since the crash of the housing market, rents have more than made up those declines as buyers are unsure or simple cannot get approved for a mortgage. From 2006 to 2009, rental prices on average increased by more than 15%, according to Moody's Analytics economist Andreas Carbacho-Burgos. Nationwide, the average rent today is $1,360 a month.

Much of the demand for rentals will likely come from twenty- and early thirty-somethings, who tend to rent rather than buy. The improving job market will fund young people who previously might not have been able to live on their own. What's more, the number of people aged 25 to 34 is forecast to grow 1.4 percent per year through 2013, helping drive demand further.

For more information: www.finance.fortune.cnn.com/2011/05/25/winners-of-the-rental-economy/

Comments on: "Rentals expected to jumpstart housing market"

Email Subscriptions