Editor update: a recent post in CalculatedRisk brought this point up again:
Below is my original article…
An article from Multi-Housing News featured a report by the National Multi Housing Council reporting that rising foreclosures are not leading to a significant increase in rental demand:
My question, as you could probably guess, is where the heck are they going? Perhaps many of these people are shacking up with parents or friends in the interim but I don’t doubt they will head to apartments.
Maybe They’re Moving Away?
Maybe this data is not showing up in rental stats because these folks are moving to another part of the country and the data isn’t easily tracked (I think right now, they’re in with friends or parents).There is good demographic data pointing out that people ARE moving south. I don’t have data on this myself, but perhaps some people who go through foreclosure in my area (Boston), move off to another part of the country which has cheaper home prices and jobs. Grubb & Ellis has done extensive research on this topic which does seem to prove that a majority of people are moving south (including many young people). This great article in the Wall Street Journal highlights this issue nicely too (impressive breakdown of the trends). Perhaps foreclosure people are moving too.
What Goes Around…
No matter where they go, people will need to rent. And as long as we continue to have immigration, combined with fewer buyers here, and tighter credit for future home buying, rental demand will increase. Just as an addendum, it is amusing to see the trend of converting apartments to condos slow down and REVERSE – see the following articles for background on this:
If you own apartments, maybe a rent increase is in your future. Good for you but just another dart in the back to a knocked-out consumer that doesn’t need any more sedation.
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