As a property manager, people ask me often “why do people rent if they can afford to buy?”. I also get asked during different economic cycles if we are gaining vacancies from tenants buying a home.
1st question – People rent for many reasons. On the higher income scale it is usually because they are in transition. On the lower income scale it is out of necessity. There will always be a need for rental properties but the demands change over time. Right now our communities need low income properties built. There is definitely a shortage in that area. We get numerous calls for Section 8 subsidized housing every day. Private landlords don’t want that business right now because the high end has been so strong.
That may be changing. Recently I am seeing more tenants buy than I usually do. I’m losing my high end tenants and I’m not replacing them as quickly as I did over the past ten years. Part of that is because lending has gotten easier again. Interest rates are low and people are working. People who were hurt in the last recession are beginning to bounce back.
Will this lead to higher vacancy rates? It’s too early to tell. Right now I can’t tell if it is a seasonal slow down or if overall leasing demand is cooling. The bigger overall question is who will pick up the needed shortage on the low end.