In a growth economy, we will expect vacancy rate going up since more people are opt to buy houses instead of renting. We will expect this will be the trend in the cities with healthy economy. Starting from 2010, we can see the rental vacancy going up. This will put pressure on rental markets around the country. The rent increase will slow down. It is a good news for the renters, not so much to the landlords. Vice versa, in a recessionary economy, people losing jobs and income going down, more people will rent instead of buying houses. In general, good economy, more people buy and bad economy, more people rent.
With Trump's pro-business policy and promises, the economic outlook for employment, US corporations future earnings, and US GDP is positive. Which is reflected on Feds monetary policy and stock market. More people are in the market for houses, we can see housing price appreciation in a lot of metropolitan areas for the past 4 or 5 years. The other important factor is the mortgage rates. At this point, the mortgage rates are still relatively low compare to historic average.
For the past 11 years after 2008 financial crisis, US has lost 9M construction jobs. It also bankrupted a lot of real estate developers. Now, the economy has somewhat recovered and people confidence has come back. The trouble is that there are not many houses in the market for sale. The supply is short since the builders have not built enough homes for the demand due to the effect of the crisis. It has been a seller's market until the mortgage rates inching up in later part of 2017 and 2018 since Federal Reserve Bank has been raising the rates 8 times by the end of 2018. Transactions has been slowing down in various markets around the country.
Now, we have this global pandemic of COVID-19 which brought the global economy to its knee. In the US alone, we have lost 35 millions jobs in just past 6 weeks and the US economy went into recession. What is this going to do to the landlords? Temporarily, the rent income will be challenge since the renters could not pay rents because of job loss, even though, the renters might get government assistence with PPP.
As states are slowly openning up their economy, we will see US economic activities coming back. Bottomline is that more people will opt for renting a place, than buying due to economic situation in US.