Even though the single-family rental market is becoming a popular trend during these troubled times in the housing industry, there is still a desire for Americans to become homeowners at some point.
Out of 1,500 renters surveyed by Zelman & Associates in five metropolitan areas throughout the country, 67% said they want to own a home in the next five years. The survey revealed that 83% of adults between 25 and 34 years old want to become homeowners relatively soon, while 69% of 18- to 24-year-olds also have a dream to someday own a home.
Despite the combination of low interest rates and decreased home prices, renters are afraid to buy right now because prices may continue to go down in the coming years, said Ivy Zelman, CEO of the Beachwood, Ohio-based research firm.
Speaking at a National Mortgage News/Source Media conference on distressed assets, Zelman stressed that, “Even though people are struggling with their balance sheets and income, they still want to own a property but are reluctant to make any long-term commitments due to the struggling economy and rates that continue to go down.”
She said that 61% of residential housing is dominated by single-family owned properties across the nation. However, one area that Zelman sees growth in is the rental market, which represents 13% of all dwellings nationwide.
In the last decade, household growth for single-family units has increased by 11%, while multifamily was at 12% during the same time period.
From 2005 to 2010, 21% of single-family rental homes were purchased from foreclosure victims, the firm found.
Zelman said she believes rental owner-occupied units will continue to be prominent for the next five years.
Meanwhile, only 35% of renters can come up with a 3.5% downpayment if they currently had to pay for a mortgage on a median priced home. (The monthly cost would be $796 a month.) “This is a great opportunity for a buyer to capitalize on an area that is going to continue to grow going forward,” Zelman said. “I think we have bottomed out for housing starts and are looking at a tepid recovery due to negative equity without anything to get excited about right now.”
