June 21, 2012
A slow down in apartment construction, coupled with low vacancy rates and a rising millennial demographic will continue to fuel a rise in apartment rents this summer.
According to Trulia, a company that tracks rents and home prices, it now costs more to rent than to own a home in 98 of the top 100 U.S. metropolitan areas.
Moody Analytics reports that demographics has become a leading factor in more people renting then buying, and “demand for rent will remain solid over the next two years.” While the overall rental rate is 35%, the renter rate for those between the ages of 25-29 is nearly 65%, and for those under 24 years old, it is 77 percent, according to the Census Bureau.
On the single-family home stage, the rental craze has made it frustrating for the homebuyer. Inventory of “decent” homes is being depleted as investors snatch up single-family homes for the purpose of renting them out. Those left on the market are receiving multiple offers, resulting in bidding wars. And prospective buyers with FHA loans are finding out that their loans may require sellers to do more home repairs than other loans. Subsequently, if a seller receives multiple offers, they may avoid the ones with FHA loans.
Prospective buyers are also losing homes to cash buyers and bidders with bigger down payments.
This is all playing into the hands of investors who surmised a couple of years ago: “Accumulate hundreds or thousands of homes, rent to the 99% and make a killing when they dump them back on a property-starved market in three to five years,” according to Personal Real Estate & Investor.
October 19, 2010
Whether it’s fallout from the housing market crash or simply that there isn’t enough money to go around, a new survey that shows more than 25 percent of renters have no plans to buy a home means property managers must treat tenants as long-term assets as opposed to transitory income.
Gene Bennett, founder/president of All American Management in Longwood, Fla., says in response to this new shift in behavior companies like his must adapt by re-examining the way they market to and retain tenants.
“With long-term commitments, it makes good business sense to offer added incentives to clients,” Bennett explains. He says it also behooves property managers to beef up customer service since long-term renters offer more positive, stable cash flow.
The aforementioned survey, conducted by Harris Interactive for Trulia, a website service for people looking to buy homes, found 27 percent of renters never plan to buy a home, and two-thirds of those who do plan to purchase one will wait more than two years. When asked what could influence them to buy a home in the next year, the top three responses were the ability to save for a downpayment (47 percent), getting a new job (28 percent), and low or lower interest rates (27 percent).
The survey’s results seem to mirror what is happening in America’s home-flipping market as well. With even less buyers for homes, according to the National Association of Realtors, only 4 percent of transactions this summer were for homes owned less than a year.
February 25, 2009
The thing about a down economy, someone, somewhere always benefits. I know a commercial building consultant (CBC) in Orlando that is doing quite well right now because lenders are realizing due diligence on the properties they lent money for need to be evaluated once in a while.
Here’s another spoil from the new economy. The renter of yesteryear, the ones who would quibble, moan, and groan about signing anything more than a seven-month lease for a home, has done a complete three-sixty in their terms longevity. Bill Marsh, who operates a burgeoning property management division (another positive in this economy!) for Real Estate Professionals of Lake County in Mount Dora, Florida says many prospective tenants are now seeking two- and three-year leases as the economy’s uncertainties continue to influence consumer habits. The good news is there are plenty of homes for everyone. Marsh and his partner Linda — who also happens to be his wife — have a current inventory of approximately 60 homes seeking tenants.
I like happy endings.
January 23, 2009
Renters and Landlords CYA
My friend Jack Meeks in Orlando, Florida, who bought back his Real Estate Professionals of America brokerage in 2007, has now re-opened his property management division. And the timing couldn’t be better.
In fact, renting out homes appears to be the mindset of more and more investors and homeowners who are paying a mortgage for a property they do not inhabit. Indeed, homes for rent are up more than 30 percent in Orlando. And with supply comes demand. Thais Soler, president of the Orlando chapter of the National Association of Property Managers, says she hasn’t seen a rental market like this in a while.
She told me the current economic climate has brought out more renters who either are being stalled from buying a home due to the credit crunch, or have foreclosed and need a place to live.
Meeks, who has been an Orlando-area real estate broker since 1988, says the rise in rentals and tenants has ushered in new issues under the current economy. He says tenants need to be screened with even more scrutiny, and tenants need to be assured the homeowner is not facing foreclosure, so they don’t face a surprise eviction.
Today, more than ever, neither party can afford to be left high and dry. People can skip out without paying. Worse yet, they can destroy the property before slinking out in the night. Or the renter can find themselves on the street because of an unscrupulous landlord who knew all along the home would be taken over by the bank. The last thing we need is more families with no place to live.
Kevin Fritz, Fritz Communications