Just as the housing recovery was gaining steam, rising mortgage rates threw a wrench in it and turned down the heat. But it's not all bad news, not for rental apartments.
The housing crash already created millions of new renters, whether they lost their homes to foreclosure or whether they were simply afraid to buy into a declining market. The homeownership rate has fallen from just over 69 percent in 2004 to 65 percent at the beginning of this year, according to the U.S. Census.
"I am scared, in part due to the fact that my father and mother had a lot of problems with their mortgage and due to the job market," said Charles Desanpedro Jr., a renter in Northern New Jersey.
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Fear and financing have kept the apartment rental market strong for the past several years, with rising rents and falling vacancies. Rents rose yet again in the second quarter of this year, according to a new report from Reis, up more than 2 percent from a year ago. But rents and vacancies have been stabilizing of late, as buyers return to the market.
Mark Sadaka and his wife are looking to buy a home in New Jersey.
"It's hard to get a mortgage, but now things have apparently lightened up. I don't know, we're exploring that now," said Mark.
Mortgage credit is easing up slightly, according to a new index from the Mortgage Bankers Association. The increase was driven by a small uptick in the number of jumbo, investor and cash-out products as well as those with higher loan-to-value ratios. All those are riskier loans.
But while credit is easing slightly, mortgage rates are rising. The 30-year fixed hit 4.41 percent on the Zillow Mortgage Marketplace, up 24 basis points from a week ago.That's the highest in two years. Rates could move higher after Wednesday's release of the Federal Open Market Committee meeting minutes and more clues to the easing of federal stimulus in the mortgage market.
(Read More: Rising Rates Sour Housing Market Plans)
Rising rates have already taken away considerable purchasing power for potential buyers. Fewer consumers now think it's a good time to buy compared with just a month ago, according to a survey from Fannie Mae.
"Mortgage rates going up by 50 to 100 basis points takes out a lot of the ability for people to afford to buy a home," noted analyst Alexander Goldfarb at Sandler O'Neill. But it also benefits apartment REITs (real estate investment trusts).
"With rates going up, it curtails development because it makes it more expensive for developers. That bodes well for the REITs because they're the ones with the capital," added Goldfarb.
Investors have been moving away from the apartment sector lately, figuring that the housing recovery would slow multifamily growth. In the past few weeks, however, the stocks have been rising, and should home sales begin to slow, they could go even higher.
(Read More: Housing Recovery Rides Rate Roller Coaster)
The swing between homeownership and renting is not always direct. Many renters do so because they want to, not because they have to. Even approaching 5 percent, rates are still historically low. Those who want to own, however, may be inclined to wait for now until rates at least stabilize.
Questions? Comments? RealtyCheck@cnbc.com