Quantifying The Surge In Post-Recession Rental Home Market

by devteam April 16th, 2013 | Share

The U.S. Census Bureau released twornhousing market briefs on Tuesday, both the results of data collected from thernAmerican Community Survey.  Rental Housing Market ConditionrnMeasures:  A Comparison of USrnMetropolitan Areas, examines fourrncharacteristics of the rental housing stock using data collected by the surveyrnin 2009 and 2011.  Physical Characteristics of Housing looks at basic physical andrnstructural characteristics of the total housing inventory on the national andrnmetropolitan area levels using data from the same period.</p

The four characteristics examined in thernrental housing brief are gross rent, gross rent as a percentage of householdrnincome, rental vacancy rates, and renter share of total households.  The survey found that the national vacancyrnrate declined from 8.4 percent in 2009 to 7.4 percent in 2011 and approximatelyrnfour times as many metropolitan areas experienced declines in rental vacancies asrnexperienced increases.</p

The share of U.S. households that rent</strongrather than own increased from 34.1 percent in 2009 to 35.4 percent inrn2011.  Only 3.0 percent of the nation'srnmetro areas saw a decline in the share of renting households while almost arnquarter showed an increase in the percentage of renters.</p

The brief found that more rentersrnare spending a high percentage of their household income on rent. Policymakersrnuse gross rent (median rent plus utilities) as a percentage of income as arnmeasure of housing affordability, and it is often used to determine eligibilityrnfor housing programs. The report considers renters to have high rental costs ifrnthey spend 35 percent or more of household income on gross rent.  Renters with these high costs increasedrnnationally from 42.5 percent in 2009 to 44.3 percent in 2011. However, averagernrental rates in the United States declined from 2009 to 2011.</p

Nationwide, only 11 metro areasrnreduced their shares of renters with high housing costs, while 62 metro areasrnincreased their shares.  Among the 50rnmost populous metropolitan areas only two became more affordable for renters acrossrnthe benchmark periods, Richmond, Virginia and Buffalo, New York where the sharernof renters bearing high costs declined by 3.2 percentage points and 3.0rnrespectively.  Some of the heaviestrnrental costs were borne by renters in Miami with 55.7 percent of rentersrnexperiencing heavy rental costs. Orlando (52.9 percent); Riverside, Californiarn(52.2 percent); and New Orleans (51.3 percent). </p

San Jose,rnCalifornia led all metropolitan areas in median gross rents at $1,460 followedrnby Honolulu at $1,419.  The lowest medianrngross rents were $502 in Wheeling, West Virginia and $536 in Johnstown, Pennsylvania.rn</p

“While we saw a decrease inrnrental vacancy rates and pricing in some areas, the burden of rental costs onrnhouseholds increased across many parts of the nation,” said Arthur Cresce,rnassistant division chief for housing characteristics at the Census Bureau.rn”Factors such as supply and demand for rental housing and local economicrnconditions play an important role in helping to explain thesernrelationships.”</p

The highest rental vacancy rate inrnthe country was Myrtle Beach, South Carolina at 40.3 percent while the lowestrnvacancies were in San Jose (3.5 percent) and Milwaukee (3.5 percent.  Vacancy rates increased the most in twornVirginia metro areas, Richmond which went from 7.8 percent to 13.2 percent andrnVirginia Beach which increased from 6.2 to 8.5 percent.  St. Louis also had a substantial increase,rnfrom 6.5 to 7.9 percent. Despite the large share of metrornareas with declining vacancy rates, which could signal rent increases, 57 metrornareas had gross rent declines and only 23 had gross rent increases.</p

The metro area with the highestrnshare of renters was Los Angeles (50.8 percent) followed by New York (48.9rnpercent).</p

The Census Bureau brief on thernphysical characteristics of housing looks at what was an average of 131.8rnmillion housing units over the 2009 to 2011 period, assessing the types of housingrnstructures, age of homes, and the size of the structure as measured by numberrnof rooms.  Only 6.0 percent of allrnhousing units were built in 2005 or later while homes built before 1950rnaccounted for 19.3 percent of the total. rnThirty-nine metro areas had a share of newer homes that exceeded 10rnpercent of the inventory but only Gulfport, Miss. (16.4 percent) exceeded 15rnpercent. </p

Houses built before 1950 exceededrn45.0 percent of the housing inventory in Elmira, N.Y. (49.5 percent), Scranton,rnPa. (48.8 percent), Johnstown, Pa. (47.0 percent), and Pittsfield, Mass. (46.9rnpercent).</p

Single-family detached homes constitutedrn81.1 million or 61.5 percent of the total nationally and were the primary typernof housing in 95 percent of the metropolitan areas.  Another 7.6 million units (5.8 percent) werernclassified as attached units, commonly referred to as town or row houses.  Buildings with 2 to 4 units composed 10.9rnmillion or 8.3 percent of housing units and 23.5 million units were in buildingrnwith more than four units.  There arernalso 8.6 million mobile homes (6.5 percent) in the inventory.</p

Those areas with the lowest share ofrnsingle family detached units were New York (36.3 percent), Naples, Fla. (40.0rnpercent) and Miami (42.3 percent). There were metro three areas where mobilernhomes accounted for a quarter of more of the housing inventory: Farmington,rnN.M. (32.0 percent), Yuma, Ariz. (29.0 percent) and Lake Havasu City, Ariz.rn(26.7 percent).</p

The median number of rooms within arnhousing unit in the U.S. is 5.5.  Sixteenrnareas had a median larger than 6 rooms. Provo, Utah had the largest percentagernof homes with 9 or ore rooms (30.6 percent) followed by Logan, Utah and IdahornFalls, both slightly over 26 percent. rnTen areas had a median number of rooms below 5.0 and Manhattan, Kansasrnand Myrtle Beach had the highest percentage of units containing only one room, 11.7rnand 11.6 percent respectively.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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