Increased Rental Demand Pushing Pricing Up and Vacancy Down

hamilton-zanze June 24, 2016

Demand for rental housing is up among all income groups due to increasing number of Americans choosing to rent instead of buy, according to research published by the Joint Center for Housing Studies at Harvard University.

The number of renter households grew by 9 million in 2005 toto about 110 million in 2015. In 2015, renter households increased by 1.4 million, the biggest one-year jump on record.

MarketWatch.com notes the shifting composition of the housing market from ownership to renting is likely due to aging baby-boomers opting to rent. Harvard researchers found a smaller increase in rentership among householders under 30, pointing to decreased household formation among that age group.

The cost of renting is climbing about 3.7% annually, about twice the pace of wage inflation. Since 2010, the national rental vacancy rate has fallen every year, hitting a 30-year low of 7.1% in 2015.