Rental housing demand continues to climb causing an increase in rents and denting the disposable income of Americans. The current rental vacancy rate – which is determined from the number of available units on the market that are unoccupied – dipped by half a percentage point to 8.2 percent in the final quarter of 2013. A peak was seen in 2009 at 11% rental vacancy, but this figure’s downturn could be blamed on the recession and the struggling housing market for that year range.

Families are turning to rentals for many concerning reasons. Many families were displaced because of rampant foreclosures. Lending standards were stricter for this period causing the inability of many families to obtain affordable mortgage packages. Others came to the conclusion that buying and maintaining a home is out of reach.

Demand for rental housing is high while supply is low causing landlords to increase prices. October through December 2013 saw a 3 percent hike in median asking rent for unoccupied units (up to $746 in 2013, as opposed to $724 in 2012). This rental rate high surpassed overall inflation for 2013, rising by double. Because of this, disposable income of citizens was hit considerably. Disposable income fell 0.2 percent in December 2013 from November – a second decline over a three-month period. Americans had to rely on savings money to satisfy their spending needs.

If rental prices continue to rise, this could encourage families to take the plunge and buy a home. The construction and development industries are also on the rise with more multifamily units, including mixed-use projects, being developed for 2014. Additionally, current homeowners should be encouraged to potentially sell their homes, due to the steady growth of the economy coupled with higher home prices. If these families move on to new home options, this would increase supply of housing for new buyers or buyers that have been scouring the market for some time. 

Source: http://blogs.wsj.com/economics/2014/01/31/rental-housing-grows-more-scarce-driving-rents-up/