Economist Discusses Shift To Apartment Rentals
PHILADELPHIA (CBS) -- Economist Chris Butler assessed the current housing market, that has most recently seen an influx of new construction on apartment buildings.
Butler explained to Chris Stigall on Talk Radio 1210 WPHT the new apartments are just another aftershock from last decade's bust of the housing bubble.
"In the housing boom prior to the financial crisis, we just stopped building apartments. There's very little supply there. That's why those rental rates are going up. Every board, every two-by-four was going into building a home because that's what people wanted. Now you're seeing that people can't afford the home, so they're renting. They're stressing out the available supply of apartments. But if you follow the statistics that are released monthly regarding building new homes and apartments, we are, pretty much, all in on building apartments."
He added that despite the increase of available apartments, middle class families are still being priced out.
"The type of apartment that we're building, generally, is not serving the middle class. These are A grade apartments, or what they call Super A, meaning they're pretty expensive. I don't really think we're addressing the real need which is that middle market, middle class kind of apartment for two working parents. We're just not building those. I would expect that the rent of those type units are going to still go up."
Currently, Butler does not yet see scenario where consumers return to purchasing homes in full force.
"When wages aren't growing you're not going to get enough people out there saving up enough money for a down payment. By the way, we're stressed out right now as consumers on credit anyway. With all of this student loan debt, how are people even going to qualify for a mortgage."
