This post will not tell you whether renting or owning is a better financial or lifestyle choice for you, however it will inform you of recent population trends in Oregon. Much like the rest of the nation — as discussed by the National Association of Realtors’ Chief Economist — Oregon has seen the population living in their own homes level off while the population in rental markets has increased strongly in recent years. There are a variety of factors at work here: first prices rose to such a degree people were priced out of the market, in recent years financing has become more difficult to obtain, foreclosures force some previous owners into the rental market, possibly multi-family preference for the younger generations, a lackluster economy which is not providing enough jobs and income for enough people to really afford to purchase homes, and the like.
What the strong growth in the population in rental properties has done is bring the overall rental share back above it’s longer run average, but more inline with the shares seen during the 1990s. It is hard to say what the appropriate rental vs ownership share should be, however in the 90s it was consistently 32-36%. At the the peak of the housing boom, the rental share dipped to 30%, which means there were an “extra” 100-200,000 Oregonians living in ownership properties than would have been the case based on the shares seen in the 1990s.
Growth rates over time clearly show these trends. It is also important to point out that the rental share and rental population increases more in tough economic times, likely due to the combination of the Fed raising interest rates (in previous cycles, but not today) and job loss and lower income making financing difficult.
In terms of the outlook for housing, it certainly remains bright. I think most agree the share of multi-family moving forward will be higher than it has been over the past few decades but single family (and ownership) will make a strong return in the next couple of years. Remember: demographics are actually in housing’s favor in the near term which also bodes well for overall economic growth.