There has been a lot of talk about how renting has become more popular since the housing bubble popped. A recent report from ARMLS attributed this phenomenon to the following: (Thanks L!)
Elevated lease activity is stoked by high foreclosures, which turn home owners into renters, and investor sales into rentals rather than owner occupied houses. Sales inventory shortages also drive potential homeowners to rent rather than purchase.
The rising number of renters has also been attributed to a lack of buyer confidence. While undoubtedly all of these things are factors, remember during the boom when we attributed the rising number of renters to the fact that people were being priced out of the market? Actually, if we look at the data back to 2001, you can see that the number of homes being rented (At least on the MLS) has been rising rather steadily, regardless of whether the home sales market was good or bad.
It might be tempting to attribute the increase then to a rising population. If that were the case, I would expect to see a similar rise (allowing for market fluctuations) over the same period. If we look at, for example, Phoenix home sales for the past 10 years, however, there is not a discernible rise. In fact, September home sales are lower than they were 10 years ago.
So while renting has increased in popularity in recent years, it obviously can’t all be attributed to factors related to the housing bust. Something else is at work here. Is it that the number of renters is more sensitive to a rise in the population than home sales? I’m not really sure. Any ideas?