With home rentals on the rise, costs follow suit
Low vacancy rate limits affordability
A growing number of people are living in rented homes, helping to drag the national homeownership rate below 67 percent, the lowest it has been since 1998, according to a study released yesterday. The report, by Harvard University’s Joint Center for Housing Studies, showed that more people are renting homes either by choice or necessity, resulting in higher rents at a time when incomes are strained.
During the first quarter of this year, 66.4 percent of US residents owned their homes, compared with 66.9 percent in the third quarter of 2010, the study said. In Massachusetts, homeownership rates fell to 65.5 percent during the first three months of the year, down from 67.1 percent in the third quarter of 2010.
At the same time, rental vacancy rates have been falling and rents rising nationally since the second half of last year, the study said. Boston’s vacancy rate dropped below 5 percent in the first quarter, making it one of the country’s tightest rental markets. The report reinforces the position of affordable-housing advocates, who say low-income residents are increasingly struggling to find adequate housing.
“Incomes are not growing at all and rents are growing rapidly,’’ said Megan Decrappeo, a research analyst for the nonprofit National Low Income Housing Coalition in Washington, D.C. “There’s a big gap now for what’s available and affordable for low-income renters.’’
The annual report from the Harvard center, titled the “State of the Nation’s Housing 2011,’’ found that millions of homeowners now have mortgages that are larger than the value of their homes. Although many homes have been turned into rental properties as the housing market has declined, the additional units have not met the demand for rentals, the study said.
Indeed, Chris Herbert, a research director at the center, said the need for more rental housing may provide a needed boost to the nation’s economy. The Federal Housing Administration, for example, almost quadrupled its lending for renovation and construction of multifamily homes between 2008 and 2010, the study said. “Rental housing markets are tightening and may begin to lead a modest recovery in housing construction this year,’’ said Herbert.
Meg Nipson, a researcher with the housing center, said there are many reasons for the increase in the number of renters nationwide, including former property owners being forced out of foreclosed homes, and a high number of would-be buyers remaining on the sidelines until the housing market’s direction becomes clearer. “The foreclosure crisis has made renting a lot more attractive,’’ said Nipson. “People are in a position where they can’t buy again.’’
Jenifer B. McKim can be reached at email@example.com.