As housing prices continue to rise, rental market could gain

The Federal Housing Finance Agency (FHFA) recently released a report stating that home prices rose from July to August, which could lead to potential buyers heading back to the rental market.

According to the FHFA release, home prices rose by a seasonally-adjusted rate of 0.7 percent from July to August, vastly improved over July's 0.1 percent growth over June.  Additionally, prices have risen 4.7 percent since August 2011.

Currently, prices are just 15.9 percent lower than the peak recorded in April 2007, and roughly equal to those of June 2004.

While many housing market analysts are pleased with the progress and growth seen in the market, there is always the possibility that as housing prices continue to grow, consumers could be driven back to the rental market. Although consumer confidence in the retail housing market will increase as prices continue to rise, many consumers may not be able to afford pre-crash prices – particularly not if the job market doesn't follow suit.

So even though the housing market is showing continued growth, rental property managers should not be concerned about a lack of rental applications coming in, because many consumers will not be able to afford housing prices in a healthy market.