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Industry Trends: The Health of the Rental Market

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Much is written about the housing market, but the perspective is almost always from the point of view of buying and selling houses.  Seldom is the perspective from the point of view of landlords and the rental market.  This trend article is for landlords!

The key determinants of rental market health are often the same as for the housing industry overall, but the impact of some factors have the opposite effect on rentals.  For example, home ownership is declining.  That’s bad for housing sales, but good for the rental income.  Other indicators are common to both housing and rentals including general economic growth, consumer confidence, and changes in real median household income.  Other factors, such as vacancy rates and rental rates seldom receive coverage in housing news, and are usually not included in analyses.

The dashboard shown below is a recap of economic trends for factors we know impact the rental industry.  The numbers shown in each house image is either the consensus projection for each factor or from the latest available data.  Coloring reflects whether the number or trend for the factor is positive (green), neutral (yellow) or negative (red) as it relates to the rental housing industry from the perspective of landlords.

 Based on current data and Real Property Management projections for 2015, the outlook for the rental market for landlords is projected to be “steady as she goes” and very similar to 2014.

Thought? Questions? Opinion?

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  1. Dan Hayes says:

    I agree with your conclusion of “steady as she goes” for the rental market and I’m personally excited to be a part of this industry and what I believe to be exciting times over the next 10 years. As we see steady slow GDP growth along with steady job creation coupled with relaxed lending criteria, we could see home ownership increase among some of the current renter population. The wild card will be what interest rates will do and as most suggest, there is no where to go but up. If rates start to rise significantly, we may see the rent population accelerate.

  2. Steve Gorman | Pacific Grove Property Manager says:

    Hi Chanda,

    Thank-you for the change of view! Interesting data on the rental market projection; we are looking forward to 2015!

  3. Keith Cisney says:

    Although job creation is up the types of jobs being created are lower income jobs and as such those holding the jobs cannot afford to buy a home. This would seem to benefit the rental business.