Here is an article recently published by MHN Online. I am reproducing it exactly and giving them all the credit. This is important for all real estate investors to know. Even though this article talks about multi-unit housing, there will be a similar effect in the single-family home market, duplex, etc. When apartment prices go up, people start looking at single family homes.
Special thanks to David Svikhart of Sperry VonNess for providing the article.
There Is a Shift From Owning to Renting, Census Data Shows
September 30, 2009
By Anuradha Kher, Online News Editor, MHN Online
Washington, D.C.--More families at every income level are facing housing cost burdens, while households with the lowest incomes continue to be disproportionately affected by the shortage of affordable rental housing across the country, according to an analysis conducted by The National Low Income Housing Coalition (NLIHC) on newly released data from the 2008 American Community Survey (ACS).
The data show that renters are paying an increasing percentage of their incomes toward rent. The number of renters with unaffordable housing cost burdens—those spending more than 30 percent of their income on rent and utilities—increased from 16.8 million to 17.4 million from 2006 to 2008. The lowest income renters are the hardest hit: 87.6 percent of renter families earning $20,000 or less are experiencing an unaffordable housing cost burden, compared to 15.3 percent of those earning $50,000 or more. In addition, median gross rents increased from $763 to $824 between 2006 and 2008. The share of units renting for under $500 fell from 16.9 percent to 16.3 percent, as the share renting for $1500 or more rose from 10 percent to 11.2
The good news for the multi-housing market is that there has been a shift from owning to renting since 2006, as households lost homes to foreclosure or put off the decision to buy in the declining for-sale home market. However, this shift has led to more crowded living conditions for renters, likely as a result of some families doubling up or taking in tenants and larger families moving into smaller, more affordable units. The average household size of renter-occupied units increased from 2.41 in 2006 to 2.44 in 2008. The percentage of occupied housing units with 1.51 or more occupants per room increased from 1.52 percent to 2.35 percent.
“The new ACS data validates the reports we are getting from across the country, National Low Income Housing Coalition President Sheila Crowley says. “More families are renting, rents are going up and the lowest income households are struggling to pay for the most basic necessities. This data was collected before the rapid rise in unemployment, which means the situation today is even worse. As Congress considers giving even more tax breaks to support homeownership, equal attention must go to the diminishing housing choices of low income renters.”
The U.S. Census Bureau recently released the ACS estimates.