How Large is the Rental Market?

The quick answer is “Big”. The long answer is “Bigger than you think.” To start, we must ask ourselves some questions. All data is from Q3 of 2007.

1. How many housing units are there in the United States?
   1. According to the recent census data (PDF), there were an estimated 128.2 million housing units in the United States in the third quarter 2007.
2. How many rental housing units are there?
   1. There are 33.9 million units occupied by renters each year. This is 29% of all housing units.
3. How many renters are there?
   1. On average, a housing unit has 2 renters of renting age. This equals to approximately 17 million renters in the United States.
4. Where do renters search for properties?
   1. There is not one site where a majority of all renters go. The online rental market is extremely fragmented with hundreds of options for renters. Rent Marketer data, suggests that renters search on many sites during the process of finding a rental property.
5. How many vacant rental units are there each month?
   1. There are 3.8 million year long (non vacation) vacant units in the US each month.
6. What is the national vacancy rate?
   1. The national vacancy rate as of Q3 of 2007 is 9.8%
7. How much money is advertised online for single family rental homes?
   1. In 2006, $2.6 billion was spend on online real estate marketing. According to Borrell and Associates, the paid rental advertising market is expected to increase by 57% by 2010 and have a total yearly marketing spend of $775 million.
8. How many rentals are online?
   1. This is a hard question to answer because there are no true tools to show 100% of all rental listings that are online. However, some aggregators like oodle.com have indexed over 1 million rental properties. With the growing number of places to post rental properties online, this number should reach 80% of all vacant listings by 2010 to be over 3 million rental units posted online.

In summary, the rental market is very large. The online advertising spend for the rental market is on track to experience continued strong growth as more and more renters are finding their rentals online.

We will continue to see the rental market increase in size. Within the next few years expect to see more rental housing units on the market due to foreclosures, immigration, organic population growth and a potential downturn in the housing market.