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» VISIT US ONLINE @ DSNEWS.COM 13 WHY ARE SINGLE- FAMILY RENTS SURGING? One of the most defining traits of the American Dream is homeownership. A continuous rise in rent prices is likely to be a driving force for many to pursue that dream. Moreover, the upsurge in rent prices over the past few months, especially in low-to-mid tier rentals is also likely to have a significant impact on the single-family rental market. e latest Single-Family Rent Index (SFRI) released by CoreLogic, has revealed that U.S. single-family rent prices increased 3.2 percent year-over-year in September 2018. However, rent price increases have slowed since reaching a peak of 4.2 percent in February 2016 and have remained stable over the past year with a monthly average of 2.9 percent. Among the 20 metro areas analyzed by CoreLogic, Phoenix had the highest year- over-year rent price increase at 6.6 percent followed by Las Vegas at 6.2 percent and Orlando at 6 percent for the first time this year. Low rental home inventory, depending on the demand, contributes to the growth of single-family rent prices, the analysis noted. e SFRI found that single-family rent prices climbed between 2010 and 2018. Rent prices of low-end rentals that cost less than 75 percent of the regional median rent increased 3.9 percent year-over-year in September 2018, down from 4.2 percent in September 2017. On the other hand, high-end rentals or properties with rent prices greater than 125 percent of a region's median rent rose by 2.8 percent in September 2018, up from 1.9 percent in September 2017. Honolulu saw the lowest rent price increase in September at 0.3 percent. However, rent prices have continued to rise in Honolulu since May 2018 when the metro experienced its first rent price increase following seven months of decline, the analysis revealed. Detroit experienced the lowest employment growth in September 2018, which could be a factor in its low rent growth of 2.8 percent. "We've seen a slight uptick in rent prices over the past few months as strong employment growth continues," said Molly Boesel, Principal Economist at CoreLogic. "e strength stems from the low-to-middle price tier, which has seen a monthly average growth of 3.2 percent since January 2018." Stronger rent growth was experienced in metro areas such as Phoenix and Orlando with limited new construction, low rental vacancies, and strong local economies. Both areas recorded a high year-over-year rent growth in September on account of employment growth of 3.8 percent and 5.9 percent year-over-year respectively. Houston saw the second highest employment growth behind Orlando in September 2018 at 4.3 percent. is is compared with the national employment growth average of 1.7 percent, according to data from the United States Bureau of Labor Statistics, the analysis stated. e SFRI also noted that rent prices continued to increase in areas affected by last year's hurricanes like the Houston metro area, with a growth of 3.3 percent year-over- year in September 2018, up from 1.1 percent in October 2017. THE FUTURE OF HOUSING e roaring U.S economy and, with it the housing market, could be in trouble. Mark Boud, Chief Economist at MetroStudy, offered a sobering portent of things to come during a fourth-quarter webcast. Among his predictions: recession could return in less than two years. Part of the prediction centers on the pending inversion of yield spread in two-year and 10-year Treasury bonds. According to the Financial Times, the spread is "the difference between the short-term borrowing rate set by the Federal Reserve (the Fed) and interest rates on longer-term Treasury notes, determined by bond market activity." According to a graph Boud highlighted in his report, the spread is just above zero and about to dip below. When the yield inverts, Boud said, it's "an uncanny predictor for recession," usually about one year out. Boud said the inversion could trigger recession as early as 2020 or 2021. Contributing to this potential looming problem is a cocktail of what tends to be portrayed as good news—job creation, housing starts, healthy interest rates. While those factors do make an economy healthy, Boud said, they've made for a competitive housing market. "ere are a lot of jobs creating a lot of home demand and that's keeping prices high," he said. In other words, job growth is outpacing home building, nearly two-to-one. Also, Boud said, "remodeling activity is through the roof," in large part due to Millennials buying and remodeling more affordable homes, owners staying in place longer, and old home stock. According to a graph in his presentation, the market could find itself overbuilt by 2022, with a median national home price of close to $300,000. Interest rates by then could also be near or even above 5 percent, making new buying or refinancing harder sells. Adding to Boud's concern for the economy is the volatility of the stock market, which he said: "will take a while to settle down." e national debt, projected to top $21.6 trillion by 2020 or so, could badly hamper economic growth. In unambiguous terms, Boud said these factors increase the risk of higher taxes, higher inflation, and a higher risk of financial collapse, "unless the tax structure is changed or government expenditure is dropped dramatically."

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