US rental demand lifts housing sector

WASHINGTON: Brian Keith is busier than ever as the architecture firm he works for rushes to wrap up work on a 300-unit apartment complex in Dallas.

The project is one of dozens the firm, JHP Architecture, has on its hands a surge of business driven by a rise in demand in the United States for rental properties.

The increased demand has forced JHP to expand, and it expects to keep hiring at least through the first quarter.

“We're seeing overall work come back and there's a backlog of contracts to go through,” said Keith, director of urban design and planning at JHP.

“There's strong interest in multi-family units and plenty of pent-up demand.”

With US unemployment at a lofty 8.6%, home foreclosures rising and property prices under pressure, more and more Americans have given up the dream of owning, opting instead to rent, a shift that is remaking the face of the US housing industry.

The percentage of Americans who own their home dropped from a peak of 69.2% in late 2004 to a 13-year low of 65.9% in the second quarter.

It edged up to 66.3% in the third quarter of this year.

On the flip side, the percentage of rental properties that are empty fell to 9.8% in the third quarter from 10.3% a year earlier.

In a recent report, Oliver Chang, an analyst at Morgan Stanley, dubbed 2012 “The Year of the Landlord.”

“Rents are rising, vacancies are falling, household formations are growing and rental supply is limited,” the Morgan Stanley report stated. “We believe the demand for rental properties will continue to grow.”

Groundbreaking for new housing jumped 9.3% in November to the highest level in 19 months, fuelling optimism that the battered housing market was regaining its footing.

The gains, however, were almost solely in multi-family housing. Groundbreaking for structures with five or more units shot up more than 30% from October to now stand at nearly double the year-ago level.

By Reuters