This was the headline of an article in November issue of REALTOR® Magazine and the article pretty much sums up what I have already shared. Namely rents nationally and here locally are the highest they have ever been. This of course is great news for us investors in residential real estate. The article went on to state that normally when rents rise it puts a demand on home buying but that isn’t happening. The rate for first time home buyers is at a 30 year low. What is causing this is multifaceted. First, raising rents means that renters find it harder to save for the down payment especially when rents are outpacing annual raises. This means that a greater percentage of pay is going towards rent. Second, home prices are rising meaning that a greater amount of down payment is required to buy the dream home. Third, since fewer folks are buying homes builders aren’t building a ton of them on speculation which in turn keeps the prices of homes up and rising and ditto for rents. Fourth, because of the lending fiasco of late, lenders have tightened up their qualifying criteria so it is more difficult and cumbersome to get a home loan. Lastly, many folks have decided that renting is the way to go because not being tied down is their preferred lifestyle.
What this means for us investors of residential real estate is that rents and the value of your residential investment should continue to rise. That’s like hitting two home runs in the ball game!
Rick Ebert / Austin, Texas / 10 Nov 15