Housing market: High demand for rental properties will lead recovery, report says
Rental properties and smaller homes are replacing the "McMansions" of decades past, the Wall Street Journal reports.
The report, citing a study released by the Demand Institute division of the U.S. Conference Board, says the U.S. housing market recovery is being led by high rental demand, with more than 50 percent of those planning to move in the next 2 years saying they intend to rent.
Nationally, rental vacancy rates have dropped from 9.7 percent in 2011 to 8.8 percent in the first quarter of 2012. At the same time, rental prices have increased, with the median asking rate now $721, compared to $694 in 2011.
Young adults and new immigrants are driving that rental demand, according to the report. At the same time, there is a rebound in new construction driven by multifamily projects, especially in more urban areas.
The Ann Arbor rental market is particularly strong thanks in large part to University of Michigan students. With developers eyeing the potential for construction near downtown Ann Arbor, several high-rise student and young professional projects are under construction or proposed for the area.
A local builder also recently announced plans to construct a 5-unit townhouse-style building on Catherine Street near the University of Michigan medical campus.
But the report says homeownership is still a long-term goal for most people, citing a Pew Research survey that showed 80 percent of respondents still think buying a home is the best investment they can make.
When people do purchase or build a home, the average size will shrink to 2,150 square feet by 2015, compared to a “housing-boom high” of 2,500 square feet.
Read the full Wall Street Journal report here.