For five hundred twenty-five thousand six hundred minutes each year, people have to live somewhere. And it looks like renting is becoming more popular.
The graph clearly shows the U.S. homeownership rate has steadily declined and that the rental vacancy rate has declined right along with it. So the two trends seem closely related, especially recently. But does a decline in homeownership mean homeowners are moving out of houses and into apartments? Not necessarily. So what is going on? At least two things. 1. The financial crisis: The recent economic downturn left many households wary of investing (or reinvesting) in a home. 2. Kids today: The younger generation seem less interested in living in the suburbs. In quite a few cities, St. Louis included, they seem to prefer to live where they work and spend leisure time. Urban commercial buildings are being converted to apartments to accommodate this increased flow of renters. The rental vacancy rate has still been declining, which means the pace of rental property construction hasn’t been fast enough to keep the rental vacancy rate steady. Be sure to check back with the FRED Blog in a few years to see where all this stabilizes.
How this graph was created: Search for “rental vacancy” and add the quarterly measure to the graph. Then use the “Edit Graph” section: Add a line by searching for “homeownership rate” and move the y-axis to the right for the second graph. Start the sample in 1965-01-01.
Suggested by Christian Zimmermann.
View on FRED, series used in this post: