As more than half of the American population is now single, what implications could it have on real estate? According to a new report, the considerable shift in demographic could mean increased demand in rental units across the country.
For the first time since 1976, single Americans have managed to outnumber married ones. This rise in single households could have great implications in not only the society, but even politics and real estate.
The new report titled “Selfies” by Yardeni Research Inc. found that singles, especially younger ones would prefer to rent than to buy. And since the size of this demographic is expanding by leaps and bounds, it could spike up demand for rental units eventually increasing the already-inflated prices.
“While they have less household earnings than married people, they also have fewer expenses, especially if there are no children in their households,” Edward Yardeni, president of Yardeni Research Inc., noted in the report.
As more singles move to live alone and are signing more leases, renting has become more expensive than paying off a mortgage. According to Zillow’s recent report, only 12 out of the 100 metro areas of the country remain affordable. Zillow’s report revealed that people are paying 29.5 percent of their income towards a lease, up from the 24.9 percent recorded before the housing market crash.
“The health of the for-sale market is directly tied to the rental market, where affordability is really suffering. Wages need to grow more quickly than they are, particularly for renters, and growth in home values will need to slow,” Stan Humphries, chief economist at Zillow, was quoted by DS News.
“As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters,” Humphries explained.
A separate report by Century 21 Real estate, however, contradicts Yardeni’s findings.
The Century 21 study claimed that more single buyers were ready to make major lifestyle sacrifices to pitch in for a house. Sixty percent of the respondents said they would avoid dining out to save for a house, 51 percent said they would cut back on vacations and 54 percent said they would minimize spending on entertainment.
Experts urge those who can afford to save up for a mortgage to take advantage of the record low rates.
THIS ARTICLE WAS ORIGINALLY PUBLISHED IN REALTYTODAY.COM AND CAN BE FOUND HERE.
(Photo credit: Income Property USA)
