One consequence of the housing crash has been the spectacular rise in residential rent. With fewer people able or willing to buy a home, demand for rental property surged.
Even with investors buying up distressed homes and converting them to rentals the supply still couldn’t quite keep up with the demand. According to real estate website Zillow, that trend isn’t likely to change anytime soon.
In its latest Home Price Expectations Survey 52% of the industry analysts with an opinion said the rental market will eventually correct, but that won’t happen for a while. Zillow Chief Economist Dr. Stan Humphries says, when it does happen, it will happen naturally.
“Solving the rental affordability crisis in this country will require a lot of innovative thinking and hard work, and that has to start at the local level, not the federal level,” he said. “Housing markets in general and rental dynamics in particular are uniquely local and demand local, market-driven policies.”
Home prices rise
While rents continue to rise, so do home sale prices. The National Association of Realtors (NAR) reports most U.S. metro areas saw slightly stronger growth in home prices during the fourth quarter of last year. NAR says prices were boosted by fewer homes for sale, a slight increase in demand and a stronger job market.
Lawrence Yun, NAR chief economist, says the long housing recovery is showing legs.
“Home prices in metro areas throughout the country continue to show solid price growth, up 25 percent over the past three years on average,” he said. “This is good news for current homeowners but remains a challenge for buyers who are seeing home prices continue to out-pace their wages. Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying.”
The national median existing single-family home price in the fourth quarter was $208,700. That’s up 6.0% from the fourth quarter of 2013.
For all of 2014, the median price increased 4.8% in the third quarter from a year earlier; 4.2% in the second quarter from a year earlier; and 8.3% in the first quarter from a year earlier.
International buyers remain active
Rising prices and a strong dollar are doing nothing to discourage foreign investors from buying U.S. homes, particularly homes in California. The California Association of Realtors (CAR) ssays that 14% of its members closed a 2014 transaction with a buyer from another country.
More than a third of foreign buyers were from China and two thirds of all foreign buyers came to closing with all cash.
Foreclosures, which triggered the housing crash, haven’t completely disappeared as a factor in the housing market. In its most recent report on foreclosures, RealtyTrac found foreclosure filings rose in January from December, including a 55% jump in bank repossessions.
Still, the 58,000 foreclosure filings were down considerably from the peak of the crisis, when there were 158,000 foreclosure filings in March 2010.
This article originally appeared on ConsumerAffairs.com