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-- -- -- -- That's your decision -- record supply of vacant apartments mixed with top lending.
Is leading people away from buying -- and to renting a result the market right.
With renters joining me now as his Sam -- managing director of research and advisory services for markets and -- -- -- The largest commercial real estate investing firms in the country thanks so much for being here.
-- -- What way have you seen in terms of how much the vacancy right and apartments has gone down just in the beginning of this year it.
Good morning and it's a pleasure to be on the program.
You are absolutely right the numbers have come in for -- demand.
Way ahead of expectation.
And at a time when home prices have fallen about 30% from peak.
And -- -- and affordability for.
For sale housing has really become.
A lot more within reach for a lot of consumers -- you would expect that our own cells will be stronger but they're not.
Part of that of course is that lack of confidence because of the job situation high unemployment.
And other part of that is that the difficulty getting loans.
So what we're seeing is.
Great demand for apartments and houses that are on the market for rent both are seeing when -- demand.
And our expectation is that for the rest of 2010.
That's gonna continue because even with the modest uptick in jobs.
Or frankly even without a whole lot of improvement in the job market.
Forces that are favoring renting.
Are very very strong we've seen a two percentage point drop in the homeownership rate from around 69% to about 67%.
That translates to about 3.4 million households that are out of homeownership.
Not all those.
Households and up in the apartment rental market of course they do go back and rent houses.
That are on the market for -- But it does have a tremendous effect on increasing -- demand.
What about the equation of the the cost of renting verses -- right now is it more back.
Two a normal historical level and how quickly do you think it -- Renting an apartment won't make economic sense for -- Well we have seen the true the ratio with a premium of homeownership to renting.
Really depart from long term patterns from 2005 to 2000.
And then it came back in line with long term average is very very quickly.
Because the housing market at such a bubble and then it corrected very very very quick.
So that balance is back in line with.
From the standpoint of the rental market I think right now it's still renters market in that there is plenty of options.
-- those options for -- are dwindling very quickly we are beginning to see vacancies dropped.
We're not seeing ran -- increase yet because it's too early for property owners to have a lot of pricing power.
But come 2011.
And the release of some 2.2 million young adults eighteen to 34 year olds.
That since 2005 have moved in with family.
That is really kind of a short term release.
Some demand that's coming into the market couple that with the long term.
Demographics of some five million additional eighteen to 34 year old projected to be in the US between 2010 and 2020.
-- At a time when supplies.
Starts of new apartment units are actually dropping very very rapidly.
You put all that together and and really indicates that pretty strong rental market with a rants appreciating starting in 2011 and 2012.
At a pretty strong rates -- from a -- for perspective.
This is probably the best times and it's going to change with the balance shifting toward the owners very very quickly.
Simon thank you so much for being here you explained it all is Sam -- It's great to see you please come back supply and demand it's not it was -- -- --
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