The Changing Ratio Of Rent Versus Own

More good news for the long-term outlook of the housing market.

Would you like a reason other than low mortgage rates to feel good about the long-term housing market? Here is a good one.

Rents have been rising strongly throughout the past two years as vacancy rates have fallen and new household formation has returned to normal. In fact, new household formation has been playing catch-up after the recession.

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According to the latest survey of landlords, rent increases will top last year’s 6.2%.

Landlords anticipate raising rents by as much as 8% in tight markets, which are most rental markets. The home ownership/rental comparison will continue to grow more favorable toward buying.

There is, however one minor problem: With rents rising so fast, can renters save enough for a down payment?

Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.

October 8, 2015

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