American Home Rental Rates Rise and Are at a 15-Yr High

There has been a decline in housing prices and more homeowners are keeping their home rather than selling. For Realtors, this has ended up in a lack of inventory, and for leasing agents and property management teams, this has contributed in more inventory.

The Department of Commerce’s Census Bureau recorded that rental vacancies dipped to 8.8% in the quarter, 0.9% lower than a year before and 0.6% below the previous quarter. This has caused homeownership vacancy rates to remain at 2.2% during the period, a decrease of 0.4% from a year ago and 0.1% from during the fourth quarter of 2011. During the first quarter, there has also been an addition of 0.6% to the 34% mark of families that rented their home.

Analysts at Capital Economics commented, “We think that the rental rate may rise slightly further yet, with the necessary flipside being that fewer households will own their own home. This is positive for landlords, whose rental yields are approaching 6%.”

According to these analysts, the housing recovery is mainly driven by investors and cash buyers purchasing homes to rent out. As a result this has led to an increase in rental rates within the nation.

In addition to what the analysts have stated, the Census Bureau has also reported a national homeownership rate of 65.4% in the first quarter, a 1% fall from a year ago and 0.6% from the quarter before. The rental vacancy rate was higher in the South at 10.8%, and lower in the West at 6.3%. and the Northeast experienced an annual increase during the first quarter from 6.8% to 7.8%. Vacancies inside principle cities at 8.8%, in the suburbs at 8.7% and outside metropolitan areas at 9.2% had not experienced much of a difference.

Capital Economics analysts stated, “We expect strong demand and constrained supply to contribute to rental inflation of 3% or so in 2012, and for landlords’ rental yields to improve to 5.75%. That would comfortably beat the yields available on Treasurys.”