Rental and Sale Markets Rise Together

As you may all be aware, the sale and apartment markets normally compete with each other. The calculations are rather simple; if the amount of people who own homes goes up, then the amount of people who rent goes down. However, according to the economists the demand for rentals and housing sales are increasing at the same time.

Why you may wonder? Well, the number of households are growing again after years of being behind the population growth. For many years, college graduates have been moving back home or sharing a house with roommates. Now, these college graduates are starting to strike out on their own which creates a huge demand for new housing sales and rentals.

Since the housing inventory has been desperately trying to catch up to the growth in population for years; both rental and for-sale homes are in short supply. With the huge demand of housing, construction jobs should increase which would also create more jobs and household demands.

The sale market is recovering faster than what we saw last year. Prices rose more than 7 percent despite the small number of houses on the market. Low home prices and interest rates also turned the cost of owning a home into a great deal compared to the increase of costs renting a home or apartment.

At the current level of supply, renters who are trying to buy a home are having difficulties. Even though the real estate recovery is just starting to spread the number of homes that are available are the lowest since 1999, which was the year of the Internet boom. For years, we have heard about the flood of homes which is currently totally 3.4 million--but are still in foreclosure or seriously late in payments. However, banks cannot flood the housing market by trying to sell the homes all at once, even if they wanted to. "A majority of the homes are tied up in the foreclosure processes," according to Freddie Mac.