The study also determined that housing stock was one to two percent more likely to shift from owner-occupied to renter-occupied if the current occupant of the property was slightly underwater. If the homeowner was significantly underwater—those with a combined loan-to-value ratio of 120 percent or greater—the likelihood was six to eight percentage points greater.
Furthermore, the study concluded that the large volume of homes that transitioned from owner-occupied to renter-occupied since the 2008 financial crisis may have created as a buffer stock of potential future owner-occupied housing, forcing the delay of new construction until a sufficient number of these now-rented homes reverted back to their original owner-occupancy status.
“A striking feature of the last housing crisis was the dramatic shift of owner-occupied homes into the rental sector. This paper looks back historically to help understand how common such shifts have been and finds that the factors affecting the rate of change are quite similar over time,” said Lynn Fisher, executive director of RIHA and the MBA’s vice president of research and economics. “Also it’s important to understand the dynamics of the existing housing stock, because they help explain how the market provides affordable housing, and how it adjusts in the face of changes in both supply and demand. This is especially true today, when new homes are adding such a small fraction to the existing home stock.”