US Rental Housing Market
From Florida to California to Hawaii, the rental market remains constrained. Although prices have flattened or fallen in many areas, the revenue potential for builders and property owners is positive.
The US rental property market is a growing chunk of the now estimated $127 Trillion global real estate market which accounts for 60% of all mainstream assets.
The rental property market is less than half of the $36+ Trillion US Real estate market, yet for small property investors it’s a fertile paradise. This update and rental housing market forecast for 2019, might help you realize where your business can thrive or lose this year.
What’s Driving the 2019 Rental Market?
What drives the 2018 rental housing market and why is the time to invest? It’s primarily due to a growing economy still recovering from the last recession, repatriation of jobs and businesses back to the US, higher housing purchasing costs, increased immigration, and growing demand from Millennials and Babyboomers.
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Lots of positive signals, and we’ll explore the 15 Key Factors below.
America: Rental Nation Still in 2019
If you haven’t heard the news, America became a renter nation in 2018. From New York to Los Angeles, more people were renting than owning for the first time ever. Home sales were down in 2018 due high prices, low availability, rising interest rates, and more factors.
With all the doom and gloom pushed in the media, we might forget that 2019 could be an excellent launch year for property management companies which use cloud technology to streamline operations.
Property managers will be expected to do more with less in 2019, and that means landlords and investors will be looking for you.
Adding to the power of the rental market is the rise of Airbnb and the short term rental. The success of Airbnb and VRBO tells us of changes happening in residential and commercial real estate and how it’s creating opportunities for Realtors and property managers.
The National Rental Housing Picture
Quick Facts about 2018:
- growth in renters was 23.7 million
- growth in homeowners 700,000
- renter growth outpaced homeowners in 97 of 100 top US cities
- rentership grew 53% in Gilbert AZ, 40% in Plano Texas, 40% in St Petes Florida, and 39% in North Las Vegas
- cities with largest share of renters: Newark NJ 74%, Jersey City 70%, and Miami FL 68%
In 2017, 43% of movers reported moving for a housing-related reason. In comparison, 27.9 % said they moved for a family-related reason, 18.5% said they moved for an employment-related reason, and 10.6% said they moved for some other reason – census.gov
Rental Property Types
There’s no shortage of rental property types. From student housing and seniors housing, to fix and rent single family, to beachfront vacation rentals, and from studio apartments to luxury condos.
|Bedroom Type||Average Rent||Change M-o-M||Change Y-o-Y|
National Data Courtesy of Rentcafe.com
Rental investing comes with extra perks in taxation and income benefits. As you’ll note in this chart, they’re all on a growth curve and still a worthy investment.
USA Cities with the Highest Rents
Rents are rising, and in some cities, very high and still rising. Good opportunity or a risky bet?
Rent data courtesy of Rentcafe.com
Key Positives for Property Investors: High Price and Low Availability
For prospective renters, homes, condos, homes and multifamily housing are not only pricey, they’re hard to find. The explosion of apartment rental websites including Rentcafe, Apartentlist.com and Padmapper attest to that. Despite rising construction numbers, housing shortages are the plague of the times.
That may explain why 2017 saw the lowest number of people moving to a new home which may be good news for property investors, landlords, and property managers. Your renters are likely to stay put and pay the rent which helps you reduce the risk and operating costs of property investment.
Based on 43 percent of the total rental demand being satisfied with traditional 5+ multifamily units, we will need an average of 328,000 units per year from now through 2030 and cumulatively 4.6 million units of 5+ unit housing — ULI’s Emerging Trends in Real Estate 2018 report
US Housing Construction Forecast
The housing construction market is brisk and expected to continue rising. Single family detached and low rise condominiums are the most desired properties. The housing market needs 1.4 million new homes each year and this could increase due to immigration.
The broad consensus supports a coherent climb in most of housing’s key performance indicators through 2019, with total starts stepping up from 1.26 million in 2017, to 1.36 million in 2018, to 1.44 million in 2019—jumps of almost 8 percent and 6 percent, respectively. Single-family starts, most forecasts assert, represent about three out of four total housing starts during that period — from Trends in Real Estate 2018 report from Urban Land Insitute.
A recent report from RentCafe suggests that multiunit construction is up 60,000 more units in January.
Chart below shows the falling rental vacancy rate nationwide.
Renter Population Growth
Immigrants are a big component of rental demand and the US rental market is expected to focus more on immigrant buyers in the next 12 years.
You can enjoy variety of new rental properties, low mortgage rates, and maximize your rental property returns through intelligent investment and management strategy and tactics.
15 Top Drivers of the Rental Property Market
These 15 factors may influence the rental housing market most and of which cities will be best to invest in.
- buyer market is young and unable to finance the purchase of a home
- not enough single detached homes available to buy
- risks in buying are high with high prices, rising mortgage rates and housing market uncertainty
- millennials are career minded and not necessarily willing to buy now
- bank of mom and dad may be running out of money
- home and condo prices too high to purchase
- buyers won’t buy due to mortgage finance restrictions and long term worries over a recession/market crash
- cost of living rising
- millennial preference for older urban neighborhoods with walkability
- rents rising too fast compared to cost of buying a home
- cap rates not sufficiently better than other investment options
- immigration into US is still strong
- retiring babyboomers having tough time places to move to
- more good condos and apartments available because regulations are decreasing and construction techniques are better
- The number and share of cost-burdened renters – those paying more than 30 percent of their income fell 2 per cent in 2017 — meaning renting is more affordable
If rental properties are even a quarter of the $36 Trillion US real estate market, we can say with confidence that it has major economic impact. The growth in rental apartment, rental condos, and home rentals is creating a lot of jobs including property managers, landlords, and the kind of passive income many investors need.
The US Rental Housing Sector Still has Legs
Please share this report on the US rental market investment market. High rental prices and low availability will continue to influence profitability, and new construction will add to the profit potential of your property management business and for investors ROI.
If you’re considering rental property investment in 2018/2019, see our posts on the best cities to buy property, how to start a full time Property Management Business, and how to improve your property investment ROI.
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The US property rental market is a wonderful opportunity to earn passive income or ramp up earnings with active property management. Make sure you are utilizing the best property management software to ease you workload and create efficiencies and create sustainable cash flow.
Property management success isn’t only about selection of the best properties in the best cities.
Take a test drive of ManageCasa the best property management solution for landlords, property investors and property management companies. You’ll understand why a simple, online, cloud-based property software solution is the way to go.
See also: Los Angeles House Prices | Los Angeles Apartment Rents | Property Management Companies | Property Manager Software | Multifamily Property Construction | Best Apps | Florida Housing Market | California Housing Market | Property Accounting Software | Hawaii Housing Market | Best Cities to buy Rental Property in 2019 | Invest in Texas Rental Property | Reduce Tenant Turnover | Property Management Solution | Tenant Screening | Raise Rent to Improve Property Revenue | Improve Property Cash Flow | Property Management Issues | Tax Savings for Property Managers | Real Estate Portfolio Tips | How to Use Property Software | Cloud Property Software