A leading magazine's end-of-2002 retort: "You'll sell your house and rent," may have had at least a grain of truth.

In some cases, fewer renters are buying homes than they were two years ago, according to the National Multi Housing Council (NMHC), but there's no indication yet that significant numbers of home owners are giving up the dream to become tenants.

In the NMHC's "Quarterly Survey of Apartment Market Conditions (April 2003)," 19 percent of surveyed CEOs and senior apartment firm executives on NMHC’s Board of Directors and Advisory Committee said fewer residents were leaving for homeownership than they have in the past two years and 54 percent said the pace is about the same. However, 27 percent said the pace of renters moving to home ownership had increased, but only slightly.

U.S. News & World Report's cover story "2003 Outlook" (Dec. 3, 2002-Jan. 6 2003 issue) predicted "You'll sell your house...and rent!" because, the article said, "Plummeting residential rents in big cities like New York and San Francisco will push some home owners to cash out the equity windfalls they've accrued in their homes. The smart money will rent until real-estate prices inevitably fall back to Earth."

Thus far, the magazine was only half right.

Rents continue to remain soft as renters enjoy a negotiating position of strength, but home buying statistics continue to rise unabated this year.

NMHC's Market Tightness Index, which captures rent increases and vacancy changes, rose slightly to 32, up from January’s index of 29. A Market Tightness Index of less than 50 indicates that market conditions are getting looser as rents fall and vacancies increase. The Market Tightness Index has hovered around 30 since hitting a record low of 4 in January 2002.

Meanwhile, riding on the back of persistently low mortgage interest rates, sales of existing homes rose 2 percent in March 2003, compared to sales in March 2002, and housing affordability rose to the highest level in 30 years, according to the National Association of Realtors.

New home sales rose even more in March, up by 7.3 percent, according to the National Association of Home Builders.

"The increase in home ownership is compounding the situation for rental housing providers," said Mark Obrinsky, chief economist at NMHC.

So is the supply. Multi-family housing permits and starts nationwide were both up in March as a two-year struggle in rent growth continues, according to M/PF Research, an apartment market research firm in Carrollton, Texas.

M/PF says suburban rental markets, home of a large population of laid-off high-tech workers, have been particularly hard hit. Renters who've managed to keep their jobs have been prime candidates for a home purchase, M/PF said.

Unemployment rose nationwide to 6 percent in April, 2003, up from 5.7 percent a year ago, as job losses in manufacturing, travel and retail continued, according to the U.S. Department of Labor.

Urban rental markets also are suffering their share of hard times.

"It’s all about jobs. Demand for apartment residences remains below normal levels in most metro areas and is likely to stay that way until we see a sustained pickup in employment," says Mark Obrinsky, chief economist at the National Multi Housing Council (NMHC).

Published: May 9, 2003

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.