Activity in the rental market has brightened the housing market and will continue to do so, Freddie Mac said in a recent report.
Freddie Mac’s U.S. Economic and Housing Market Outlook, released in June, highlighted how rental activity has bolstered the housing market overall.
Rentals should continue to be a bright spot, Freddie Mac said, as increased rental demand is expected from those who are currently postponing homeownership.
“Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens and they have accumulated sufficient savings,” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement.
In the twelve months through March 2012, the U.S. saw a 4 percent increase in households moving to rentals. During the same time period, rental costs rose 2 to 4 percent, which is lower than what was typically seen before the Great Recession, Freddie Mac said.
Meanwhile, rental vacancy rates declined approximately 2 percent in the past two years.
“Overall apartment market trends may show further vacancy declines and rent gains, with property values improving as well,” Nothaft said.
According to Freddie Mac, home values for multifamily properties have risen an average of 25 percent over the past two years.