10 Sep What’s Behind the Apartment Boom?Demographic Trends: There are three primary trends which are most likely to influence the need for additional rental units in the next five years. These trends include the following:
- Increasing population growth for segments of the population ages 18-24 and 65+. These two demographic sectors are some of the most likely to rent as opposed to purchase when selecting new housing units. Using a local example, Appleton’s population of individuals aged 65 and over is expected to grow by 20 percent through 2017, in contrast to an overall population growth rate of 3 percent.
- Prolonged impact of the recession, foreclosures and financial reform on the ability of individuals to qualify for mortgage loans. Some estimates suggest that 1/3 or more of those currently renting would be unable to qualify for a mortgage based on today’s credit score requirements. For those who experienced bankruptcy, foreclosure or prolonged job loss, the impact of financial difficulties on credit and purchasing power typically lasts 5-7 years, creating a sustained pool of renters.
- Likelihood of a reduction in government programs to increase home buying. Most notably, the mortgage interest deduction, once a sacred institution, is on the table as part of the fiscal cliff discussions. Eliminating this popular deduction would ultimately reduce the price of housing, but also minimizes the economic benefits of owning versus renting.