According to recent studies conducted by Zillow, home ownership in the United States is experiencing significant declines. It has been determined that approximately 86% of all renters within the nation simply do not have the income or the credit score that is necessary to purchase a home.
The decline originated in 2007, during the housing market collapse. Based on the details that were evaluated in the study, home ownership is nearly at a 48-year low. The numbers that were obtained during the study have, in essence, determined that the future of home ownership is relatively bleak.
In this brief guide, you will learn the information established by Zillow and more about the projected progression of home ownership throughout the United States.
Current Housing Statistics
According to current housing statistics, more Americans are leaning towards renting rather than buying. Rent amounts have increased a total of 7% since the year 2001; however, the average household income in the nation has dropped 9%.
This means that approximately 50% of all people that rent in the United States are experiencing complications in paying their rent due to earning less money, overall. In fact, based on the numbers pulled from numerous studies, Americans are spending in excess of 30% of all of their income (before tax) on housing expenses.
Based on economic professionals that are part of the Urban Institute, approximately 59% of all of the households that were officially formed between the years of 2010 and 2030 will elect to rent their home due to the expansive costs associated with purchasing a home.
Individuals that have never purchased a home are now renting for much longer periods of time before qualifying for home ownership. This is especially true of those that live in highly-populated areas that charge more for both rent and home ownership – such as Denver, Colorado.
What It Means to Property Investors
As a result of this trend, there will be a drastic increase in demand for rentals across the nation. The current rental-based housing market will be unable to meet the demand of new renters. If you specialize in rental properties, this could be a big opportunity. Be aware of this expectation and start preparing now for this demand.
The same holds true for commercial rentals. It is much less common for companies to purchase buildings for their businesses. Instead, they are opting for renting the buildings that they require for business purposes.
Many have wondered, if credit scores improve and income levels increase, will housing market trend would reverse? The answer, in short, is “no”. The demand for rental property will continue.
Why purchase homes and attempt to flip them given the current housing numbers? It is best to purchase rental properties and work towards building a portfolio of property to prepare for the influx of renters. In addition, it’s important to screen tenants closely to make sure they can continue to pay increasing rent prices.
