What Will Rental Industry Look Like in 2016?
Since the real estate collapse a few years back, the idea of home ownership went to the wayside for a lot of people. Because of that, the rental industry will be on the rise through next year by an average of 8%, with single family homes being the largest rental alternative choice. Rental prices, however, have been on the rise due to an increase in the demand for rentals and not much available inventory for qualified tenants who can pass the tenant screening.
The greatest rental housing growth will include rentals in the single-family rental sector for the major institutional investors, being simultaneously present in multiple cities and states. These investors are targeting areas with harsh downturn through the housing crisis, and are now setting their sights on areas like Las Vegas, Nevada, Arizona, and Florida. With approximately 13.5 million vacant homes currently on the market, the rental industry for homes will be on the rise between 2% and 4% nationally over the next two to three years, providing a wide market of availability in a diverse assortment of locales and neighborhoods.
In the second quarter of 2015, vacancy rates dropped to 6.8%, marking a 20-year low, and with home ownership dropping to historic low levels, landlords truly do not have any need or incentive to lower their rental prices going into a new year. A 4% hike in rental rates is predicted for 2016, with the demand for rental housing expecting to grow by approximately 6.6 million units throughout the year, with 4.2 million renters entering the rental industry over the next decade.
It does remain cheaper to rent than to buy, however, by about 38% on a national basis. The vacancy rates for apartments are predicted to rise to about 5% in 2016, and then again to 5.3% in 2017. Despite increasing rental rates, renters can use the knowledge that rental prices can vary greatly, making it easy to research whether or not an apartment is fairly priced and giving the renter some negotiating power before signing a lease.
Instead of trying to sell a home at a lower price just to get it to sell, now would be a great time to engage some stringent tenant screening processes and rent out a vacant home while the demand is strong, and on the rise. Renting an apartment or a home will remain a more attractive option for those consumers who do not have the credit or confidence needed to buy. In the United States, multifamily rent growth is expected to reach 4.6% in the fourth quarter of 2016.