Rentals Up in September

Happy Hump Day! Here is your industry update:

Housing starts were up in September by 6.3% to a seasonally adjusted annual rate of 1.017 million homes. Most of these gains came from apartment building construction. Apartment building construction has gone up by 18.5% after having plummeted in August. This recent increase in apartment construction is characteristic of a year-long trend of most Americans renting instead of buying. Apartment construction has gone up by 30.3% over the past year. Here’s why…

“Home prices rose 6.4 percent in August compared with a year ago, according to real estate data provider CoreLogic. This marks a substantial slowdown. Home values had chalked up annual gains of as much as 12 percent toward the end of last year.

Those increases are substantially larger than wage growth, which has barely exceeded inflation by increasing at roughly 2 percent a year. Without wages rising more strongly, it becomes difficult to save for a down payment and qualify for a mortgage. This has boosted the share of Americans who rent, which has sparked construction of apartment complexes and simultaneously caused monthly rental costs to rise.”

In terms of implications, the real estate firm Zillow estimates that today 29% of people’s household income goes towards their rent, whereas in 2000 only 24% of it did. 32% of adults are choosing to live with a roommate, whereas in 2000 only 25% of adults made that decision.

Read the full article…

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