Rents Up, Ownership Down—the Balance Will Shift

Investors tells the rise in rents may make some people think twice about renting as opposed to buying. The average rent of $1,016 in 2009 will hit 1,101 this year, according to Marcus and Millchap’s 2012 National Apartment Report. Analysts expect it will rise four percent next year. As people do move from renting to owning, there are echo boomers in the 20 to 34-age bracket who will want those rentals, keeping demand high. The national apartment vacancy rate is expected to hit five percent this year, down from 6.6 percent in 2010. The current reluctance of developers to build new units should help keep vacancy rates down as well. According to the National Association of Real Estate Investment Trusts, apartment construction is at a 20-year low, and there is a 2.5 million shortage of apartment units in the U.S. Increased demand for rentals will ultimately drive people back to homeownership.

(Photo credit: Wikipedia–Old Pan Balance Scale)

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