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A homeowner\u2019s equity position is one of the central issues that prompts owners to take their property from owner-occupied to rental status, according to a new study from the Mortgage<\/a> Bankers Association\u2019s Research Institute for Housing<\/a> America. About 2 percent of the housing stock makes such a transition over a decade.<\/p>\n Read more<\/strong>: Rental Reconversions Give Remodeling a Boost<\/span><\/p>\n<\/blockquote>\n The study shows that 6.5 percent of homes built before 2000 and 10.3 percent of homes built in the 1990s went from owner-occupied to rental status.<\/p>\n \u201cUnderwater homes are notably more likely to transition into the rental sector, possibly because of reduced incentives to maintain the home and related decay,\u201d notes Stuart Rosenthal, a Syracuse University professor, who authored the study.<\/p>\n Owner-occupied homes with a combined loan<\/a>-to-value ratio between 100 percent and 120 percent are between 1 and 2 percentage points more likely to become rentals, Rosenthal notes. Homes with a CLTV above 120 percent, on the other hand, are between 6 and 8 percentage points more likely to make this transition.<\/p>\n However, homes aren\u2019t as likely to transition if the rental market is not vibrant. Also, certain neighborhood or structural attributes \u2013 like a waterfront location or being a detached property \u2013 also makes it less likely the property will turn from an owner-occupied home to a rental one, the study notes.<\/p>\n The study also found that age-related depreciation makes it more likely that a home will become a rental home. Also, higher home prices did not likely cause a transition from owner to rental status either.<\/p>\n “For certain types of homes rising house prices encourage transitions into the owner-occupied sector,” Rosenthal notes.<\/p>\n Falling home prices, on the other hand, often prompt swings into the rental market. The large increase in homes that went from owner- to renter-occupied in the aftermath of the financial crisis will likely have an affect on new-home construction, Rosenthal says.<\/p>\n “Movement of housing stock back to owner-occupancy status \u2026 has the potential to undercut demand for new construction since most home building occurs in the owner-occupied sector,” Rosenthal writes. \u201cA large buffer stock of potential owner-occupied homes may now sit in the rental segment of the market.”<\/p>\n Source: \u201cWhy More Single-Family Homes Are Becoming Rentals,\u201d National Mortgage News (Feb. 7, 2017)<\/em><\/p>\n<\/div>\n [ad_2]\n
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