The US residential housing market is well on the road to recovery, with median house prices having risen approximately 40% nationally since growth took hold in 2012. This first phase of the recovery has not only seen a sharp rebound in prices and sales volumes but also a surge in demand for rental housing. The shift from homeownership to renting has emerged as a result of tight credit conditions and lower household wealth after the financial crisis. With homeownership levels now at a historically low 65% level and rents rising steadily, all-cash investors have flocked to the market, purchasing homes to operate as income properties.
In the second stage of the housing recovery we expect to see construction continue to recover and inventory levels to rise from their very low current levels. This should mean slower, more sustainable national house price rises in the region of 4-6% and a subsequent rise in the proportion of sales to homeowners as household income growth surpasses this rate. Other tailwinds for this shift will be low mortgage interest rates, the gradual easing of bank lending standards and increased on-market inventory.
For a more detailed look at national housing trends and regional markets download RTI’s biannual housing report.