Rents Are Up…
The American Dream Is Unattainable…
Household incomes aren’t coming anywhere near keeping pace with rising home prices. According to the United States Department of Housing and Urban Development, the average household income in 2021 will be $79,900, up just 2.4% from 2020. Quickly escalating home prices combined with modest income increases are squeezing people out of the market.
Why is this space so hot and getting hotter by the minute? Economics is driving consumer behavior. The average U.S. home price hit $287,148 in May 2021, a 13.2% increase from May 2020, according to a new report from Zillow. That’s a record rise since the company started collecting the housing price data in 1996. Rents are up, too, at a 10.9% growth year-over-year, according to CoreLogic. That’s still a more affordable jump than housing prices.
According to Hunter Housing Economics, investors will put some $40 billion (paywall) into build-to-rent development in the next 18 months. That sounds like much more of a trend than a fad to me.
Demographics continue to play a role as well. Millennials, consumers ages 25 to 40 in 2021, are now the largest age group in the country. There are 72.1 million millennials compared to 71.6 million Boomers (ages 57 to 75). Millennials are entering their peak family-building years. They want out of their early-adulthood apartments and want something with a yard. And four walls. And good schools. And nice restaurants and bars. They want houses in nice communities. However, they are often saddled with massive amounts of student debt. This debt, combined with slow income growth and escalating home prices, leave them with few options. They still need to rent.
The real estate market is on a path that I do not see an end in site.
Stay Tune For More Updates And Thank You For Reading, Dave