Housing equilibrium – look at rents

Apartment vacancies nationwide have fallen from about 8% to about 5 percent. With no buyers of housing, there is an increase in the demand for rental units. Rents have increased in price every quarter since 2010. Rents are at record levels for 74 markets and for 27 of them rents have topped $1,000 per month on average. 

The cost of housing is going up and this will eventually cause renters to want to switch to ownership. It is the imbalance tween renting and owning that will start to cause households to want to switch.This is what will solve the home market problem. However, the biggest issue is that much of the falling housing is in areas that people do not want to live. The cost of being further from the central city is high. There will be a two-tiered housing markets with firm prices for those areas that are desirable and continued poor prices for those areas which never should have been built in the first place.

Higher rents will have to continue to get over the stink of falling housing prices, but it is the price imbalance that will drive the market.