For the past half-century or more, homeownership has formed the cornerstone of the American Dream. But ever since the economic crisis, America has been in the throes of a long-running Great Reset as it shifts gradually from homeownership toward renting. The number of “renter households” increased by more than half a million in 2013 according to a recent analysis on the state of the housing market from Harvard’s Joint Center for Housing Studies.
A recent post over at the economics blog Sober Look suggests that the shift is occurring faster than even I expected. This huge growth in the renting population means that, in the coming years, America’s housing crisis will have less to do with foreclosures and underwater homes and more to do with rental housing, as the supply of these units is falling far behind growing demand.
The fact is that, even as more and more Americans want to rent, the market just hasn’t kept up. Sober Look pulled out some illuminating graphs from the FRED database (Federal Reserve Economic Data) maintained by the St. Louis Fed. Curious to dig in deeper to this rich dataset, I found four key charts from the FRED database that paint the broad picture of why the shortage in rental units is the looming crisis Americans must face.
The first tracks the growth in renter-occupied housing units (in thousands of units) from 2000 to the first quarter of 2014. It’s essentially a straight trend up, showing the growth in demand for renting.
The second charts the number of vacant housing units for rent in the U.S. over the same time period. The number tracked upwards for the first decade of the century, but the decline has been precipitous since the end of 2009.
