Friday, June 3, 2016

A Nation of Renters

Updated December 2016

As real estate prices, particularly in some regions of the United States, have risen well into the severely unaffordable range as shown on this table:

...the long-term growth in home ownership has dropped as shown on this graphic:

At 63.5 percent, American home ownership is at levels not seen since 1994.

Since people must have somewhere to live, renting has become the name of the game as shown in this graph which shows the percentage of American housing units that are rented:

Rental housing units now form nearly 32 percent of the total housing market, up significantly from the pre-Great Recession low of 26.7 percent and well above the 16 year average of 28.6 percent.

As a result of growing rental demand, this is what has happened to rents on a year-over-year basis:

This is what happened to the annual increases in rent compared to the overall headline Consumer Price Index:

After falling below the inflation rate just after the end of the Great Recession, as you can see, after January 2012, the increases in rent far outstripped the headline inflation rate and in March 2016, rents increased on year-over-year basis at more than five times the inflation rate.

Just for completeness sake, here is a graph showing the difference between year-over-year rent increases and headline inflation:

It's becoming apparent that, one way or another, consumers of housing in the United States over the past decade have been and are continuing to get screwed.

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