The Chinese New Year celebrated 2012 as the Year of the Dragon, but many analysts, including powerhouse Morgan Stanley, believe it is the year of the Landlord. “Rents are rising, vacancies are falling, household formations are growing and rental supply is limited,” the Morgan Stanley report stated. “We believe the demand for rental properties will continue to grow,” analyst Oliver Chang further supported.
More and more Americans are saying goodbye to the white-picket fence dream of homeownership. Rather, the US population is choosing to rent. By the numbers, thirty-four percent of the US population is renting. Moreover, in thirteen of the top twenty-five Metropolitan markets over fifty percent of the city resides in rental properties. Market factors like unemployment rates, rising home foreclosures, and property prices under pressure are leading the revolution toward a Renter’s World.
Another shift remaking the face of the US housing industry are social trends. First time marriages and family planning continue to be put on hold. Generation Y are opting to pursue roommates, job mobility and professional and academic development rather than cul-de-sac and car pools. First-time homeowners once accounted for nearly half of home sales, now less than thirty-five percent. New generational tendencies are stock piling demand for renter populations. I think it’s safe to say not only will 2012 be the year of the Landlord but many more to come.
Between market and social trends, the rental market is undoubtedly changing. A question to ask the industry is will the existing tools for renters meet the needs of this new generation? I’m unsure of the answer myself, but I’ll certainly stick around to listen and learn.