The changing face of the housing market has had a profound effect on US rental households. A marked rise in the number of families renting rather than owning opens up more buy-to-let opportunities throughout the US generally and particularly in those areas with high job creation.
Statistics recently released by the US Census Bureau reveal a significant change in the make-up of US rental households. Homeownership has fallen generally throughout the country, but has plummeted particularly among families with children under 18. In parallel, the number of families renting has soared.
US rental household statistics
The figures reveal that between 2006 and 2016, the number of American families owning their home fell by 14%. This translates to 3.6 million households less over the decade. On the other hand, family rentals rose by 16% over the same period, the equivalent of 1.9 million households. As a result, families now represent a third of all renters.
The highest increases among America’s 30 largest metro areas came in the South. Charlotte in North Carolina saw the highest rise with 73% more family rental households by 2016. Houston recorded the biggest number with 107,000 more households, equal to 41%.
Florida rental households
Two of the largest Florida metros also experienced a similar trend. Between 2006 and 2016, Orlando saw home ownership among families drop by 12% and family rentals rise by 36%. In Tampa, the number of families owning their home fell by 18% over the decade while the number of families renting went up by 33%.
Factors behind the rise
A RentCafé report looking at the Census Bureau statistics attributes the sharp rise among US rental households to four main factors. The housing crisis in the late 2000s and early 2010s forced many families into foreclosure. As a result of the property crash lending conditions today are stricter making access to mortgages a serious challenge for many Americans.
The US is currently suffering a severe shortage of property, particularly at entry-level. In June 2018, there was just 4.3 months’ supply on the market, a slight rise in the year but still well below enough to satisfy demand.
The fourth factor comes in rising house prices. Continual monthly hikes mean it’s “extremely difficult for families with children to keep up with this pace,” according to RentCafé. Affordability levels continue to drop and in Q2 this year, they reached their lowest since Q3 2008.
Florida and Houston price rises
No large metro area has been unaffected by rising prices. Florida has been registering price hikes every month for the last 78. RentCafé statistics point to a 62% rise in house prices in Orlando in the five years to June 2018. Tampa property went up by a similar amount (60%). In Houston, house prices experienced an increase of 30%.
All three metro areas share the common denominators of strong job creation and high population growth. A recent US population report revealed that the number of inhabitants in Florida will grow by 4.7% this year with Orlando set to register one of the highest increases in the Sunshine State.
More buy-to-let opportunities
In tandem with the growth in US rental households goes the rise in rental prices. In June, the US registered the highest monthly rental rate on record of 2.9% year-on-year. RentCafé statistics show that rates rose by 20% between April 2013 and April 2018.
The increases affected rental households almost across the board. Rental rates went up by 37% in Orlando and by 34% in Tampa during the five years. The increase in both demand and rental rates augers well for buy-to-let opportunities, particularly in areas such as Florida and Houston.