“The rent is too damn high” — add that to the growing list of reasons we’re going to see a boatload of new buyers entering the market in the next few years. That’s a reasonable conclusion from new Census Bureau data.
When the housing market collapsed, a lot of folks had to leave homes they could no longer afford — often because of foreclosure or short sales. They became renters, in part simply because their credit ratings took a big hit.
Result: Rental vacancy rates are down. The new Census Bureau report says that those vacancy rates dropped from 8.4% to 7.4% in just two years (2009 to 2011) — homeownership obviously declined at the same time.
Nothing new there.
The question is, though, how many of those renters still want to own? Homeownership-as-American-Dream idea is alive and well; survey after survey shows that. And I’ve been saying for some time now that there are “shadow consumers” who will buy as soon as their credit ratings clear up. (The media has since dubbed them “boomerang buyers.”)
So they want to own because of that whole American Dream thing. They also want to own because they’re realizing that renting ain’t cheap.
See, the Census Bureau found that “more renters are spending a high percentage of their household income on rent.” (By “high percentage” they mean 35 percent or more of their income on rent and utilities.)
In fact, even though rent went down from 2009 to 2011, more renters were falling into that “high rental costs” category. (Of note, though, is that Richmond is one of only two metro areas in the country that became more affordable for renters; Buffalo, N.Y., is the other.)
These renters read the news so they see interest rates staying low. They see their bank accounts so they realize how much they’re spending. It’s just a matter of time before they can and will want to own. or own again.