Homeownership is so … 2006
The struggling housing market—still facing ubiquitous “for sale” signs and dour reports on home prices and foreclosures—is now facing yet another, more fundamental challenge. Whether or not by choice, a growing percentage of households are becoming renters.
At the state level, not all district states are seeing quite the same shift, however. Renter households ticked notably higher in Minnesota and Wisconsin from 2006 to 2010, but in Montana and North Dakota, not so much, and South Dakota was in the middle, according to the American Community Survey, conducted by the U.S. Census Bureau (see Chart 1).
But that covers up a lot of variation among the Ninth District’s larger cities, both in the proportion of renter households and in the change seen in recent years. Data for 19 cities in the district show that most (15) saw renter households increase their market share from 2006 to 2010, but four saw a decrease. The city-level renter ratio differed widely, from a decrease of 5 percentage points in Bismarck, N.D., to an increase of almost 10 percentage points in Kalispell, Mont. More than half of the cities (10) saw the share of renters increase by at least two percentage points.
Of the four cities where renters lost household share, three were in Montana. The other was Bismarck (see Chart 2). It’s hard to say exactly what’s behind these outliers. Regional housing markets are not always synchronized with each other or with national housing markets. Bismarck has been booming of late, thanks to the oil boom in the western part of the state, and is reportedly a preferred location for professional firms servicing the oil patch. These well-paid workers may prefer ownership over renting.
Great Falls and Missoula (Mont.) saw a dearth of new rental units during this period, which might have kept a lid on would-be renters. During this five-year period, for example, Great Falls permitted only about 150 new multifamily units, compared with 700 units of single-family housing. Missoula permitted fewer than 600 multifamily units compared with almost 1,600 single-family units.
These figures for renter-occupied housing, now roughly 18 months old, have likely risen further, as rental vacancy rates have been shrinking across much of the Ninth District, a topic that will be featured in depth in the July fedgazette.