Housing market improves, renters taking lead

The housing market is improving, but much of it is due to renters.

A report from the Joint Center for Housing Studies of Harvard University showed that while property management companies have experienced a decline in rental vacancies, the housing market has made some progress due to consumers looking for affordability.

The rental market experienced more than 4 million new renters in the past seven years, the report explained. In addition, vacancy rates have declined significantly and more property managers have increased rents.

There has been much improvement in the American housing market, but it is important to note that recovery is still in its infancy, the report noted. Home prices have risen in many parts of the country, but significant improvements won't occur until the foreclosure situation is rectified. Approximately 2 million homes are still in the country's distressed property inventory, and with many more to be added, it is unlikely that this will be alleviated soon.

"While still in the early innings of a housing recovery, rental markets have turned the corner, home sales are strengthening, and a floor is beginning to form under home prices," said Eric Belsky, managing director of the Joint Center for Housing Studies. "With new home inventories at record lows, unless the broader economy goes into a tailspin, stronger sales should further stabilize prices and pave the way for a pickup in single-family housing construction over the course of 2012."

Many consumers have not had an opportunity to refinance their mortgage for many reasons, and this has hurt the industry's chances at a quick recovery, the report said. In addition, more Americans are paying more for their housing expenses. From 2007 to 2010, the total number of homeowners needing more than half of their incomes to cover housing expenses increased by 2.3 million. In all, the figure was at 20.2 million.

Several reports have backed up the Center's assertion that the rental market is strong. According to one housing group, vacancy rates have reached some of the lowest levels in many markets nationwide this year, and could drop even lower.

Specifically, the National Association of Home Builders explained that the multifamily housing situation has improved slightly to start 2012. The Multifamily Production Index rose to 51 from the previous quarter's 49. The gain brought the figure to its strongest point since the second half of 2005.

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