In fact, according to a recent market intelligence report from John Burns Real Estate Consulting, the rate of renters entering the housing market in Q4 of last year was just 14 percent. In the mid-2000s, that number was closer to 20 percent, with about one in every five renters purchasing a home after their apartment lease expired.
But these declining numbers are nothing new. The numbers of renters making the transition to homeownership has dropped consistently over the past couple of years, and rates have remained below 17 percent mark (the historical average) since 2008.
The report, which uses data from publicly traded REITs, studies the habits of tenants living in 520,000 units across the United States–specifically those whose leases are up or close to expiring. Most of the REITS studies are located in financially stable or affluent communities and cater to largely millennials demographics.
In addition to its findings that home ownership ratings are on the decline, the report also shed light on some important information regarding rental costs.
According to the report, the average rent for these REIT-owned apartment units is $1,652 per month. That’s more than 30 percent higher than the national average.
These inflated rates appear to have little effect on the rates of homeownership, though.
“One would think that enduring years of sizeable annual rent increases would push tenants toward owning a home,” the report reads. “However, even with an improving economy and a more stable employment outlook, this trend has simply not occurred.”
Fortunately, the recent revisions to FHA loan requirements may change all that, but according to the report, data has not shown a significant increase in FHA buyers as of yet.
To see the John Burns Real Estate Consulting market intelligence report, visit RealEstateConsulting.com.