Rent Increases Dont Deter Former Homeowners from Renting
Given the slow economic recovery consistent rent increases are not enough to motivate renters or former homeowners to look into homeownership opportunities.
In real supply-demand fashion the national apartment vacancy rate continues to be in “a steady decline” pushing the average monthly apartment rental cost in the U.S. up 3.8% from a year earlier.
Apartments.com data show the average rent increased to $1,048 in the fourth quarter of 2012, while the vacancy rate dropped to 4.5%, “the lowest level in more than a decade.”
It means more rent increases are coming up in 2013.
Nonetheless, according to Apartments.com findings from a nationwide survey of more than 1,300 renters, “a growing number of former homeowners” are choosing to rent. Reasons include employment relocation, cost savings and apartment size.
After carefully considering economic factors such as affordability, employment opportunities and unaffordable homeownership expenses," said Dick Burke, senior vice president and general manager, Apartments.com, previous homeowners choose to rent and the trend is growing.
Economic uncertainty is forcing renters to take a realistic approach toward budgeting for 2013 and search for more affordable accommodations, he said.
The number of previous homeowners who choose to rent is up. By the beginning of 2013 up to 35.1%, or more than a third of current renters surveyed previously owned a home, compared to 33.6% in 2012.
The number of previous homeowners surveyed in 2013 who indicated “they could not keep up with expenses tied to homeownership” also is higher than the number of those who lost their home to foreclosure, divorce, or relocated for employment.
Compared to previous years, the 2013 findings show the top five reasons previous homeowners are choosing renting show “economic struggles” which matter regardless of whether someone chooses to own or rent and are typical in areas with high unemployment rates have turned into the most significant factor.
Renters who lost home due to foreclosure or divorce represented 11.2%, up from 5.9% in 2012.
The number of renters who stated they cannot afford to keep up with the expenses associated with homeownership increased to 14.2%, up from 10.5% in 2012.
At the same time in 2013 22.2% of survey participants find renting more affordable, down from 26.3% in 2012.
Flexibility is key for 15.7% of renters, compared to 21.2% in 2012. But while employment is everyone’s top priority, flexibility to relocate for employment went down to 13.3%, compared to 20.5% in 2012.
Employment and a more stable economy will continue to be the primary reasons for housing accommodation changes in 2013.
More specifically due to economic hardship 15% of respondents would relocate for employment opportunities and another 13.2% are shopping for a less expensive apartment.