Home sales may get a boost from the rising prices occurring in the rental market, which is making it cheaper to own rather than rent in a growing number of cities.
“We might see a spring season better than the numbers are predicting,” Jay Brinkmann, the Mortgage Bankers Association’s chief economist, said during the an MBA conference in Florida this week.
The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.
Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.
Still, “everything is going to be based overall where the economy goes,” Brinkmann said. “This is going to be a slow year. There are a number of headwinds we’re facing in terms of economic growth.”
Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)
Commentary form Bob Karp of Karp Properties LLC – To me the most interesting thing about the above article is that rents are beginning to increase. In the Sierra Vista area we are still seeing a lot of competition in the rental housing market for single family homes. Rents have decreased about 10% over the last year except for the very best location and condition properties. Rentals of manufactured homes in the Hereford area of Arizona are the most competitive, with properties staying on the market for as long as 90 days before renting.
All real estate markets are local and we have yet to see a significant tightening of the rental market here.