SEATTLE, Dec. 13, 2017 /PRNewswire/ -- A boom in
single-family rentals contributed to a crunch in affordable
inventory, limiting options for lower- and middle-income buyers.
The number of single-family homes that are rented grew by 5 million
between 2006 and early 2017, and these homes tend to skew toward
the less expensive end of the housing market.
In total, about 270,000 fewer homes are sold each year compared
to 2006, or about 5 percent of the homes that would sell in a
typical year, according to a new Zillow® analysis. About 120,000 of
these lost sales were among the most affordable homes that are
often sought by first-time buyers.
As owners lost their homes to foreclosure following the housing
crisis, the renter population grew rapidlyi -- the share
of single-family homes being rented out jumped from about 13
percent in 2007 to a high of 19.2 percent in 2016. Demand for
single-family rentals remains strong -- 45 percent of renters would
like to rent one, but only 28 percent can actually find a
single-family home to rentii.
"For the past 10 years, the number of single-family homes that
are rented has grown steadily and remains near the highest levels
ever recorded," said Zillow senior economist Aaron Terrazas. "The combination of foreclosures
and growing rental demand following the housing crash was an
attractive opportunity for investors – large and small – who were
able to buy foreclosed homes and use them to meet the rental
demand. At the same time, many long-time owners have opted to hold
onto their homes as rentals even after they decide to move
somewhere else. With such a large portion of single-family homes
being rented out, and with new homes being built more slowly than
the market needs, home values will continue to rise, particularly
among the most affordable homes with the highest demand."
Millennials are the largest group of buyers in the housing
market, driving up competition for less expensive, entry-level
homes. But over the past five years, the homes being bought and
converted to rentals are increasingly the same affordable starter
homes that first-time buyers are after, limiting buyers' options
and increasing competition. Almost 40 percent of rented
single-family homes bought since 2012 are among the most
affordable, compared to 34 percent of single-family rental homes
that were bought before the housing market crash.
Across the country, 37 percent of rented single-family homes are
among the least valuable in their housing markets. In Detroit, Cleveland, and St.
Louis, more than half of the homes being rented are among
the least valuable in the area. In other markets, such as
Boston, San Jose and Seattle, upward of 40 percent of single-family
rentals are among the priciest third of homes in those
communities.
Metropolitan
Area
|
Share of
Single-Family Homes that are Rented,
2016iii
|
Share of
Single-Family Rentals in the Least Valuable Third of the
Market
|
Share of
Single-Family Rentals in the Middle Third of the
Market
|
Share of
Single-Family Rentals in the Most Valuable Third of the
Market
|
United
States
|
19.2%
|
37.2%
|
36.0%
|
26.8%
|
New York/Northern New
Jersey
|
11.3%
|
43.3%
|
27.5%
|
29.2%
|
Los Angeles-Long
Beach-Anaheim, CA
|
24.6%
|
29.0%
|
35.2%
|
35.8%
|
Chicago,
IL
|
12.5%
|
47.0%
|
29.2%
|
23.8%
|
Dallas-Fort Worth,
TX
|
16.4%
|
34.4%
|
43.2%
|
22.4%
|
Philadelphia,
PA
|
14.8%
|
46.7%
|
34.4%
|
18.9%
|
Houston,
TX
|
16.1%
|
36.4%
|
37.5%
|
26.1%
|
Washington,
DC
|
14.8%
|
24.0%
|
36.2%
|
39.8%
|
Miami-Fort
Lauderdale, FL
|
20.5%
|
29.7%
|
35.0%
|
35.3%
|
Atlanta,
GA
|
19.8%
|
39.5%
|
35.4%
|
25.2%
|
Boston, MA
|
8.2%
|
21.8%
|
25.3%
|
52.9%
|
San Francisco,
CA
|
20.8%
|
33.2%
|
33.4%
|
33.4%
|
Detroit,
MI
|
17.1%
|
59.3%
|
28.0%
|
12.7%
|
Riverside,
CA
|
24.7%
|
33.8%
|
33.4%
|
32.8%
|
Phoenix,
AZ
|
20.8%
|
34.7%
|
42.1%
|
23.1%
|
Seattle,
WA
|
16.6%
|
31.7%
|
27.7%
|
40.6%
|
Minneapolis-St Paul,
MN
|
10.2%
|
45.5%
|
29.3%
|
25.2%
|
San Diego,
CA
|
25.1%
|
27.1%
|
36.1%
|
36.8%
|
St. Louis,
MO
|
14.3%
|
52.6%
|
30.8%
|
16.6%
|
Tampa, FL
|
18.2%
|
42.3%
|
32.9%
|
24.9%
|
Baltimore,
MD
|
17.0%
|
43.8%
|
35.6%
|
20.6%
|
Denver, CO
|
15.0%
|
30.2%
|
38.3%
|
31.4%
|
Pittsburgh,
PA
|
13.3%
|
46.0%
|
28.3%
|
25.7%
|
Portland,
OR
|
16.5%
|
34.0%
|
35.9%
|
30.2%
|
Charlotte,
NC
|
18.2%
|
29.0%
|
40.3%
|
30.7%
|
Sacramento,
CA
|
23.3%
|
34.3%
|
39.6%
|
26.2%
|
San Antonio,
TX
|
18.2%
|
25.4%
|
50.1%
|
24.5%
|
Orlando,
FL
|
21.2%
|
32.4%
|
38.4%
|
29.2%
|
Cincinnati,
OH
|
14.5%
|
48.2%
|
30.0%
|
21.8%
|
Cleveland,
OH
|
14.8%
|
55.4%
|
29.2%
|
15.4%
|
Kansas City,
MO
|
18.3%
|
NA
|
NA
|
NA
|
Las Vegas,
NV
|
27.5%
|
33.7%
|
41.9%
|
24.4%
|
Columbus,
OH
|
18.1%
|
43.9%
|
33.6%
|
22.5%
|
Indianapolis,
IN
|
17.8%
|
NA
|
NA
|
NA
|
San Jose,
CA
|
19.6%
|
23.3%
|
35.6%
|
41.2%
|
Austin, TX
|
18.2%
|
32.7%
|
36.1%
|
31.2%
|
Zillow
Zillow is the leading real estate and rental
marketplace dedicated to empowering consumers with data,
inspiration and knowledge around the place they call home, and
connecting them with the best local professionals who can help. In
addition, Zillow operates an industry-leading economics and
analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of
economists and data analysts produce extensive housing data and
research covering more than 450 markets at Zillow Real Estate
Research. Zillow also sponsors the quarterly Zillow Home Price
Expectations Survey, which asks more than 100 leading economists,
real estate experts and investment and market strategists to
predict the path of the Zillow Home Value Index over the next five
years. Launched in 2006, Zillow is owned and operated by Zillow
Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
i Zillow analysis of data from the U.S. Census
Bureau's Current Population Survey, Annual Socio-Economic
Supplement, March 1979 to
March 2017.
ii Zillow Group Report on Consumer Housing Trends,
2017
iii U.S. data from U.S. Census Bureau Current
Population Survey, all metro-level data from American Community
Survey
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SOURCE Zillow