The long-term trend toward ownership is making the 'bubble' look fairly solid.
Almost since the turn of the millennium, the "housing bubble" has been front page news and editorial page speculation. But that's only half the housing story. What has been happening in the rental housing market is unprecedented; also, it is important for understanding what has really been happening to home prices and home sales.
The rental market is the other side of the boom - the dark side, for rental property owners, the bright side for families looking for a bargain. For the first time in US history, the absolute number of renters has been falling. There are fewer now than there were 10 years ago. The number of renters peaked at 35.7 million families in early 1995. By mid-2004, it was down to 32.6 million. There has been a modest increase since then, to 33.7 million; at that rate, the 1995 peak will not be reached again until the end of the decade. At the same time, the number of owners has increased by more than 11 million, from 64 million in early 1995 to 75 million today. It will be close to 80 million by 2010.
(It's useful to bear in mind the distinction between numbers and percentages. The homeownership rate has been rising through most of the past century, but population growth has meant that the absolute number of renters, as well as owners, has been increasing. The number of owners dropped slightly in the Great Depression; the number of renters has never dropped over any extended period.)
Rental property owners face extraordinarily high vacancies. Currently the national vacancy rate is just under 10 percent. To put this in context, the traditional dividing line between "tight" and "loose" rental markets is a 6 percent rate. In several large metropolitan areas, the rental vacancy rate is above 15 percent - not just older slow-growth industrial areas like Cleveland and St. Louis, but also rapidly growing areas such as Atlanta and Houston.