With all eyes on sales, rentals have quietly and consistently increased year over year. The number of rentals exceeded the number of sales in 2016, and the margin has continued to widen since then according to data from the Greenwich Multiple Listing Service. The good news for the Greenwich market is that overall activity has increased. Greenwich, Cos Cob, Riverside and Old Greenwich continue to attract residents.
The reason for the increased demand in rentals will determine the duration and effect on the market. There are long and short term reasons supporting a nationwide trend toward rental demand, and local attributes may also play a role including:
- Demographics: (a) retiring baby boomers and (b) family forming millenials.
- Tightened credit and inability to obtain a mortgage.
- Transitional personal reasons.
- Strategy of selling first in order to avoid bridge loans and facilitate the buying process.
- A preference for renting.
- A lack of desirable or affordable inventory.
- The absence of urgency to buy in a flat or slowly rising interest rate environment.
- Cap on mortgage interest deductions for newly acquired indebtedness.
- A desire to plant roots in a community before one can afford the house one desires.
Traditionally, a rise in rental demand is indicative of pent up demand. That’s good news. An expanding and improving economy and stock market may help those who have been unable to obtain a mortgage. The time and means to save for renovations will facilitate the ability of purchasers to acquire inventory in need of updating. Those who are currently renting as a strategy in order to have cash at hand will be ready to make strong offers on highly desirable properties. Baby boomers who seek to downsize and pay down debt will still enjoy mortgage deductions on smaller, more affordable homes. No doubt there will be retirees who never return to home ownership, but demand for housing stock from millenials will come. It may be slower to materialize in expensive markets like Greenwich, but the simultaneous trend towards mega cities continues and Greenwich is well situated as a luxury town a commuter train away from one of the world’s largest and highly educated cities.