With the housing market still struggling from the burst of the housing bubble several years ago, rental housing has been on an upswing.
For the year ending in mid-2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing, according to Freddie Mac. This was coupled with a net reduction of 600,000 households owning their own home.
Ownership rates fell 1.5 percent over the past year. However, those rates fell at a higher rate for younger individuals. Ownership fell 4.4 percent to 21.9 percent for those under 25 years old, and 7 percent to 34.5 percent for those between ages 25 and 29.
Households renting rather than owning has pushed vacancy rates lower for apartment complexes, Freddie Mac notes. The Census Bureau reported that rental rates in buildings with at least five dwellings dropped to 10 percent in the second quarter, which is the lowest rate in over five years.
With rental demand rising and apartment economics improving, the multifamily sector is a positive signal for the U.S. housing industry, Freddie Mac Chief Economist Frank Nothaft said in a statement.
The drop in home ownership among those under 30 likely is because of tighter lending standards amongst financial institutions. After the collapse of the housing market in 2008, banks required higher credit scores for home loans and often required new owners to put down a 20 percent deposit on a new house.
Write to Samuel Weigley at email@example.com.