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…according to Bank of America Merrill Lynch analyst Michelle Meyer, the shift toward renting from home ownership in the past few years, while largely a consequence of the housing bust, has lasting implications.
While many newly created households will be buyers, “a good portion will also be renters, given the challenges facing the youth population in terms of student debt and access to credit,” says Meyer.
Meyer estimates that household formation undershot by 2.5 million units during the housing bust years. That is now “pent up household formation that would be realized over the next few years in addition to the natural underlying trend.”
So although foreclosures are on the decline, shrinking that pool of renters, there is still likely to be strong demand for rental homes as not all of the newly formed households in the coming years would be able to secure a mortgage. Americans Will Still Rent Despite Housing Recovery: BofA Merrill Lynch – TheStreet.