CNBC recently published an article regarding the lowest homeownership levels seen in the past 19 years. Though home prices have soared and value increased, the rate of ownership has actually declined below 64% for the first time since 1995. It now stands at 64.8%, dropping down from 69% during the housing boom of the mid 2000’s. This is due, in part, to the lack of affordable housing caused by investors buying out the majority of lower-priced homes, tougher credit standards and high down payments for first-time buyers.
“Home sales were higher in 2013,” the article writer, Diana Olick states, “but that was largely due to huge demand from individual and institutional investors on the low end of the market. Using all cash, they bought up swaths of single-family homes in the most distressed markets, pushing prices higher by double digits. They didn’t leave much behind for regular, credit-dependent buyers . . . Investors, having priced themselves out of several formerly hot markets, are now pulling back somewhat on purchases, leaving an historically short supply of lower-priced homes for a usually strong cohort, the first-time home buyer.”
Analysts from Capital Economics note, “The increase in the share of households renting to a 19-year high in Q1, and the low supply of homes entering the rental market, look like boons for both rental value growth and multi-family homebuilding.” However, as homeownership falls, the trend bodes well for investors in rental housing.
To read the full article, click here: http://www.cnbc.com/id/101624168