IRVINE, CA—GlobeSt.com recently reported that buying a home is more affordable than renting in more than 54% of US markets, according to a report from ATTOM Data Solutions. However, the report also revealed that 64% of the population lives in markets that are more affordable to rent than buy, showing that homebuying will continue to be an uphill battle in 2018, the firm's SVP Daren Blomquist tells GlobeSt.com. We spoke with Blomquist about what the report data says about the future of housing and multifamily.

GlobeSt.com: What does this data say about the future of housing and multifamily?

Blomquist: This data shows that homebuying will continue to be an uphill battle in 2018, particularly in large population centers. That will keep homeownership rates historically low in those markets and continue to provide ample demand for rentals—both multifamily and single family. That bodes well for the multifamily market going forward with the caveat that even though renting is more affordable than buying in these markets, that doesn't mean it is highly affordable. We are seeing some concerning affordability numbers for rents that indicate there is not much runway left in raising rents unless we see stronger wage growth kick in.

GlobeSt.com: If owning is more affordable than renting, yet inventory is scarce, what will people who are looking to make a change in their living situation do?

Blomquist: In many high-priced coastal markets people are stuck between a rock and a hard place, and if both renting and buying are highly unaffordable, they might end up living with family or friends or moving to a more affordable market. That more-affordable market in some cases might be the next county over that requires a longer commute, or it might be across the country if they can telecommute or find comparable employment in that new location.

GlobeSt.com: How can the multifamily market stay strong with rents climbing higher than mortgages?

Blomquist: In most areas, multifamily inventory is limited relative to demand, which continues to put upward pressure on rents, but we don't think that can continue much longer. Builders have been disproportionately building multifamily inventory over the past four years, and so that inventory is coming more in line with demand than the owner-occupant inventory.

GlobeSt.com: What else should our readers take away from this report?

Blomquist: Housing affordability, or lack thereof, is the biggest inherent weakness of the current housing boom. It's a good problem to have in many ways, but if the industry gets too creative/risky in finding ways to overcome that obstacle (i.e., riskier loan products) or ignores the affordability caution flags (continues building at the same pace in markets where affordability has deteriorated below historic levels), then we could see another housing bubble form. We're not there in most areas as it stands, and the best scenario over the next few years is for the steam to be slowly taken out of the housing engine as supply catches up with demand without overshooting demand.

Instant Insights /

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