Examine the factors driving the current and future rental market

Out-of-state applicants for rental properties increased 42% from 2020 to 2021, according to new data analysis from TransUnion. During the same period, rental inquiries in rural areas increased by 28%, while the volume of urban rental inquiries increased by only 10%.

The main driver of these trends appears to be rising housing costs and the widespread availability of remote work, which began during the COVID-19 pandemic.

“With remote work firmly entrenched in the norm, we’ve seen tenants actively seek out new locations that better suit their budget and lifestyle,” said Maitri Johnson, vice president of tenant screening and employment with TransUnion. “While many are leaving the state for sunnier environments, we are also seeing a preference for rural and suburban areas which have more space and a lower cost of living, but also a relative proximity to cities and the airports.”

Texas saw the largest increase between 2020 and 2021, with more than 310,000 new residents. Meanwhile, New York saw the biggest decline, losing more than 319,000 residents. Generally, interstate migration patterns show more people leaving the Rust Belt and the Northeast in favor of the South Atlantic and Mountain states, as well as Arizona and Texas.

Overall rental occupancy in the United States hit a record high of 98% in January 20222. This may be due in part to an influx of homeowners who capitalized on the equity in their property by selling as prices housing was at an all-time high, and renting until the valuations come in. to move back.

Looking at 2020-21 rental applications, there was a 37% increase in applicants who had sold their home in the past year and a 16% increase among applicants with an outstanding mortgage.

Higher home buying costs have simultaneously prevented many young adults from becoming first-time home buyers. However, the same inflationary trends have also impacted the affordability of the rental market.

Rent prices have increased by 14% between 2020 and 2021 while the median income of candidates has only increased by 6% over the same period. As expected, arrears on rent payments have increased. While on-time rent payments were 96% in January 2020, they had fallen to 92% by the end of 2021.

“Demand is clearly very strong at the moment, which is all the more reason for a thorough screening process for rental applications with a focus on income and debt ratios and their effect on affordability” , Johnson said.

There are signs the housing market is cooling, with the Fed having already hiked interest rates several times this year, meaning renters can expect to keep renting until stability economy is found. TransUnion’s analysis suggests immigrants may well support strong demand in the long-term rental market.

Citing data from the US Census Bureau and Harvard University’s Joint Centers for Housing Studies, the report presents highlights of this population’s participation in the rental market.

In 2022, immigrants represent more than 14% of the total population of the United States. This percentage is expected to increase until 2060, when the US Census Bureau projects that immigrants will represent 17% of the country’s population4.

“Because people who immigrate to the United States tend to remain tenants for long periods of time, there is likely a cumulative effect to this sustained increase,” Johnson said. “Current demand resulting from the housing market may decline as house prices fall, but this population will likely keep rental demand high for decades to come.”

To read the full report, including more details and tips for renting, click here.

About Teresa G. Wilson

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