At a recent conference held in Berkeley California, Ken Rosen president of the National Association of REALTORS, and University of California economist Ken Rosen gave their views on why there are fewer homeowners today verses ten years ago. It is something of a mystery but the speakers did a good job of unrevealing it for us. One reason is that many people still remember the bad times of all of the nations’ foreclosures and how long it took to get back on our feet. So these folks are shell shocked and avoid buying a home. That is good news for us investors in residential real estate as we can provide good housing for those that are risk avoiders. Reasons also cited included:
- The shortage of single family homes. Production of single family homes simply hasn’t kept up with demand. Nationwide there is an estimated 3.7 million deficit over the last eight years. And in the Austin area, the cost of acquiring land has increased dramatically.
- The price of buying a home has increased due to the lack of inventory (see #1).
- Student loan debt is high and this keeps many young families from buying a home. They simply can’t save for the down payment while paying off this debt. And as they continue to pay down student loans the cost of buying a home increases. It seems for many to be a moving target.
- Mortgages are harder to come by today than yesteryear with stricter qualifying standards in place. I think this is a good thing. As we investors know only too well, there is more to owning a house than just making the mortgage payment. Those window treatments and plants really start to eat into the pocket book. Then comes the maintenance expenses.
So folks for the foreseeable future owning a well-placed piece residential rental in a growing area like Austin is a good investment.
Rick Ebert Austin, Texas / 12 June 17