Mortgage Watch | July 8, 2019

Rentals surge as housing tries to catch up

According to real estate analytics firm RealPage, demand for rental apartments reached a five-year high this spring, spurred by new household formation and home sales not being able to keep up. The demand is also pushing rental prices up, which may eventually make renters decide to become homebuyers.

“The number of new apartment move-ins in the second quarter of 2019 increased 11% over the same period last year,” says the report. “The demand surge drove the national occupancy rate to 95.8%, compared with 95.4% at the end of the second quarter of 2018.”

The increase was attributed to economic uncertainty in the second quarter that had already slowed the market in the first quarter. RealPage’s chief economist characterized this phenomenon as playing “catch-up.”

Chicago and Houston saw the highest demand in rentals, with move-ins in those markets outpacing apartment construction by nearly 3 to 1, according to the report. With demand comes higher prices, with rentals shooting up 3% from the second quarter of 2018 to the same period this year and many small metros seeing bigger increases. Rents rose 7.4% in Wilmington, N.C., and 6.4% in Huntsville, Ala., according to the report.

While much of that new supply is targeting higher-income earners, the market for lower-cost rentals is much tighter. The asking price for homes continues to increase, while the cost of procuring a mortgage is at one of its lowest points ever, with income growth being the key in turning the tide as well as more abundant housing opportunities.

Last week, the Trump administration announced it would explore using federal programs to reduce local barriers to housing construction, such as restrictive zoning.

Source: Realtor, RealPage, TBWS

 

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market improved by +8bps. This caused rates to move sideways on moderate volatility for the week.

 

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.