Rental demand and low homeownership interest motivate investors

Real estate investment trust investors and others are being drawn by the potential profitability of owning rentals as single-family home sales to owner-occupants remain low.

One major source of demand for rental housing is echo boomers, according to Financial Advisor magazine. These children of baby boomers commonly cannot afford a home or prefer not to buy one. However, some may have growing families, encouraging interest in larger accommodations. Availability of rental apartments is also limited in some areas, because construction rates were slow in recent years, which has driven up rental costs.

Combined, these factors may set up an opportunity for investors in single-family homes to rent to these adults, who the news source notes may prefer renting due to the flexibility it affords. Homeownership can make it more difficult to move in order to take advantage of job opportunities or for other reasons, compared to renting.

Rental managers and owners should keep in mind the importance of this demographic as they consider who may be interested in their properties. With relatively high rental demand, occupancy rates and lease prices have been high, and some analysts expect them to remain that way for the next year or two at least.