Increase in Rentals Drives Home Prices Higher

By Stevie Duffin Updated on 12/14/2012

By Daniel Duffield

This year, a combination of growing house prices and increased investor activity has indicated some recovery within the real estate market; however, first time homebuyers still face challenges, stated CoreLogic in their November MarketPulse report.

Mark Fleming, chief economist for CoreLogic, and Sam Khater generated a real estate report that demonstrates the medium term influences which drive these developments in housing.

These two locate the factors which have pressured home prices upward and the sales which correspond to the increased rental demand with a decrease in home purchase, due to the fact that investors seek properties for the purpose of rental. The findings revealed that this greater demand has boosted home prices, providing relief for underwater borrowers who now stand a better chance of recovering from an upside-down scenario.

For the housing recovery to truly take flight, a healthier economy is necessary, with a corresponding growth of income and consumption coupled with a consistent rise in home values, wrote CoreLogic in the November report.

Until these factors come into play, single-family rentals have and will continue to garner more attention. Furthermore, the volume of rental lease properties has risen consistently month over month for the past two years, according to statistics from CoreLogic. With an average of 42,000 new rentals accrued over this two year period, the average rate of new rentals doubled when compared with pre-recession figures.

In general, the statistics released by CoreLogic illustrate a mortgage financing structure that has resulted in scarcer defaults and foreclosures. The portion of mortgages in serious delinquency and foreclosure dropped to 6.7% of all mortgages during September, decreasing from 10.2% the previous September and constituting the 23 month in a consecutive string of delinquency decreases.

In addition, the national foreclosure rate has dropped to 3.3% from last year’s 9.2%.

Approximately 1.3 million houses, or 3.3% overall, underwent foreclosure during the 12 month period ending in September, dropping from 1.5 million during the same 52-week period a year prior.