Diverted Homeowners Fueled Rental Affordability Crisis
Millions of would-be homebuyers were “diverted” into the rental market as a result of the Great Recession, adding huge unexpected new rental demand to what was already forecast to come from the millennial generation’s transition to adulthood, according to new research by Dowell Myers, Gary Painter, Hyojung Lee, and JungHo Park of the Sol Price School of Public Policy at the University of Southern California. The research, published by the Mortgage Bankers Association’s Research Institute for Housing America, finds that more than 5 million otherwise expected renters left or never entered the housing market, “their growth displaced by the diverted homeowners and diminishing overall household growth far below expectations.”
- An estimated 6 million would-be homeowners have been diverted to renting or have left the housing market over the past decade.
- Only about one-third of them were absorbed into single-family rentals.
- New construction of multifamily apartments fell far short of demand during and immediately after the Great Recession, and the recent boom in new apartment construction has not been sufficient to put downward pressure on rents.
- Nationally, there were 7.4 percent fewer owner-occupied homes and 4.3 percent fewer households in 2012 than would have been expected given population growth. The shortfalls are even larger in Los Angeles (–6.5 percent), Houston (–5.9 percent), and Washington, D.C. (–5.8 percent).