This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Renter Nation Rages On




By Diana Olick, CNBC Real Estate Reporter

NEW YORK ( CNBC) -- The supply of empty homes for rent is falling, and the nation's homeownership rate is hovering near a fifteen year low.

How can that be when the housing market is finally turning around and more homes are selling?

The answer is simple: Investors.

The nation's home ownership rate ticked up a statistically insignificant basis point, from 65.5% in the first quarter of this year to 65.6% in the second quarter, according to the U.S. Census Bureau. Q1 was the lowest home ownership rate since 1997 and is down from the peak of 69.4% in 2004.

Given that home sales improved significantly during the first half of this year, you would think that home ownership rate should have surged higher, but the rate is calculated using only owner-occupied homes. If an investor buys one home or 100 homes, those homes are not even put into the calculation because they owner doesn't live in the homes. Realtors estimate around 20% of homes sales are currently to investors, but given bulk deals offered by the government and banks on foreclosed properties, that percentage is likely higher.

More from CNBC
Sandy Weill: The Guy Who Made the Bank Monster
Will This Year's Olympic Medals Be the Most Expensive in History?
New Styles Sizzle as US Swimwear Grows

"The very modest increase in the homeownership rate in Q2 does not persuade us to alter our view that the share of the population who own their home will fall further over the next couple of years," writes Paul Diggle of Capital Economics. "Meanwhile, supply conditions in the rental market are tightening, with a falling proportion of single and multi-family rental homes vacant."

Rental vacancies in fact fell to their lowest rate since 2001. That is why so many investors are rushing in to buy distressed properties. The rental market his hot and getting hotter. Average asking rent rose five percent from a year ago, though they are down slightly from the previous quarter.

Since the peak of home ownership in 2004, six and a half million additional U.S. households are renting, which Diggle calculates is equivalent to 90% of the increase in total household numbers over that time. He estimates home ownership will fall to 64% over the next two years.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs