WE’RE HEARING that consumers love the concept of homeownership but when it comes to finding a place to live they end up renting.
But this dichotomy is easily resolved for many renters these days.
A new report shows that more renters are living in single-family homes. That means less hassle with repairs and no mortgage.
In 2012, single-family detached units accounted for 28.5% of the renter-occupied housing stock. It grew by 2.6 percentage points between 2007 and 2012, according to the annual Census Bureau American Community Survey.
This growth has been fueled by investors who have been snapping up foreclosed properties and turning them into rentals.
An analysis of the ACS data by Fannie Mae researchers discovered that even homebuilders are supplying the market with rentals.
They found that 7% of newly built homes in 2011 were slated for rentals. In 2012, the percentage of newly constructed single-family units slated for rentals edged down to 6.5%.
“Single-family homes continue to absorb an outsized share of new rental demand arising from the retrenchment in homeownership,” a Fannie Mae Housing Insight Report says.
For lenders hoping for a pickup in home buying, the trend does not look good.
A recent report by economists at Wells Fargo Securities shows that 857,420 new households were formed in the U.S. during 2012. But the number of homeowners fell by 237,750 and the number of renters rose by 1.1 million.
The WFS economists noted the investors are finding fewer bargains these days and they are turning their attention to leasing their current properties.
Lower investor demand will likely take pressure off home prices and inventories. But this may not be a good time for this transition as the housing recovery seems to be losing momentum.
The budget and debt ceiling fight in Congress is likely to hurt consumer confidence, and it is unclear where the new homebuyers will come from since wage and job growth has been so sluggish.
Going forward, the housing recovery will depend on homebuyers. “Put simply, we need more of them. In order for that to happen, overall employment conditions need to improve further,” according to the latest WFS Housing Chartbook.
Due to the shutdown, the Bureau of Labor Statistics did not release the September jobs report on Friday.
That disappointed one lender who was expecting another disappointing jobs report. “It would have pushed down rates,” he said.
MOST READ/EMAILED: Amilda Dymi’s piece on Ocwen and Nationstar was the most read content on our website this week. This was technical stuff about securitized delinquent loans but if you are in that niche of the business, you are going to be interested! Cash flow forever. Most emailed had to do with the government shutdown. Our folks are looking at it as a half-full glass, apparently, since they were emailing Brian Collins’ piece on the shutdown having minimal effect on home lenders.
BLOG OF THE WEEK: You have to be careful when you weigh in on religious matters, but John McDermott’s blog on “Broken Commandments?” seems to tread the line responsibly. We’re not sure there was any real religion here, though. Several persons marketing themselves as Christian home lenders got a stern cuffing and fine from the New York State Bank Superintendent’s office. We’re not sure how many commandments got broken here but how about the one about taking the Lord’s name in vain?
OH, THOSE CRAZY VINERS: All good things must end, apparently. This week Viner “Tropical Seabreeze” bid a fond adieu to the Vine and the mortgage business, in favor of a pool business he’s been involved in on the side. Guess the pool business is a steady gig in Alohaland, so good luck to Tropical Seabreeze. Naturally, some of his fellow Viners bid him a fond farewell. As always, salty language is involved, so if you don’t want to hear it, don’t check out the thread. But if you do, do! (Viners might add an extra “o” to those last two words.)
JOBS, JOBS, JOBS: We like to give a shout out to companies that make more than ten net new hires in a year. Didn’t come across any this week. Not to worry, though! Friday the 4th is the day the monthly jobs report is set to come out. Mortgage jobs are included in the tally, although they are always a month behind the nationwide numbers. So we’ll just analyze the mortgage numbers…but wait! The government shutdown meant no jobs report on the 4th! So, I guess we will have to go on an estimate, our own fanciful one. Given our druthers, we’d have a full employment economy, with zero unemployment. So that’s the number we will go with! And hope the sequester semester ends soon.
Mark Fogarty is editorial director of the SourceMedia Mortgage Group and has been commenting on the mortgage market since 1984. Brian Collins is the group’s senior editor and D.C. bureau chief. He has worked the mortgage beat since 1988.