Analysis: Number of renters rising as housing market struggles

Some of the reasons for the increase in renting are that many households can’t afford to purchase a home, or don’t want to own one, pushing up the numbers of renters and the amount of apartment construction, according to the analysis, released Tuesday. 

Before the housing market’s decline, mortgage rates made it cheaper to own than rent, whereas now it’s cheaper to rent in about 72 percent of metro areas.

While home prices increased about 5 percent every year between the 1940s and 2007, since then prices have dropped precipitously, down 37 percent to the lowest levels since 2002. 

Others are new to the rental market because they are former owners who lost homes to foreclosure or bankruptcy. Although there are some renters who can afford to buy right now, many are concerned about a return on investment, risk and the costs associated with buying in the slowly recovering market. 

Among the signs of a rising rental market:

• Apartment construction has increased 115 percent from its October 2009 low, and permits for apartments hit a two-year high in March. Meanwhile, permits to build single-family homes are hovering around their lowest figure in 50 years. 

• The number of completed apartments averaged about 250,000 a year before the housing market boom. That number dropped to 54,000 last year and is likely to remain around that level this year. The total could double to about 100,000 in 2012 and reach 250,000 by 2013 or 2014, according to the CoStar Group, a research firm, the report said. 

• Rents are increasing along with demand, with the median price of advertised rents up 4.1 percent between the end of 2009 and the end of 2010, census data shows.