The single-family rental market has grown by 5 million from 2006 to 2017 – wiping out 270,000 potential home sales annually.
An analysis by Zillow considered the impact on the nationwide home inventory and calculated that booming rental market meant a 5% decline in for-sale inventory each year.
The figures reveal that 120,000 of the total lost sales would have been the starter homes desperately sought by first time buyers. In the past 5 years, almost 40% of the single-family homes bought and converted to rentals have been starter homes.
A major reason for the rental surge was the financial crisis as mortgage borrowers who lost their homes were forced into rentals. The share of single-family homes that were rented out jumped from 13% in 2007 to 19.2% in 2016.
There’s still strong demand for single-family homes to rent with 45% of renters wanting one but only 28% finding an available home.
“The combination of foreclosures and growing rental demand following the housing crash was an attractive opportunity for investors – large and small – who were able to buy foreclosed homes and use them to meet the rental demand. At the same time, many long-time owners have opted to hold onto their homes as rentals even after they decide to move somewhere else,” said Zillow senior economist Aaron Terrazas.
Source: Steve Randall, Mortgage Professional America, 12-14-17