Posts Tagged ‘home rental help’
While inventories of homes for sale have been shrinking this spring, MLSs are filling the void with rental listings for single family homes that until recently were foreclosures. Some 16.1 percent of all listings on MLSs today are rentals, more than double the number in 2006.
Single family rentals are $3 trillion business today and growing as investors turn to real estate and opt to rent out the bargains they buy until prices improve. Today the single family rental market accounts for 21 million rental units or 52 percent of the entire residential rental market, according to a new study by CoreLogic economist Sam Khater.
Yet the single family rental market is poorly understood and almost invisible to economists and journalists because virtually all rental market data tracks multifamily properties and either ignores the single family segment or lumps it together with multifamily.
“Single family rentals are very distinct from multifamily and they behave very differently,” said Khater in an interview with Real Estate Economy Watch. For example, on a per unit basis, rents for single family rentals run 1.5 to 1.6 times higher than multifamily. Unlike multifamily, millions of single family rentals are listed on MLSs by real estate brokers, many of who represent new owners in acquiring investment properties. As the for-sale inventory has trended down since 2005, the rental share rose 13.3 percent last year alone. As of the end of last year rental closings were up 11.5 percent year-over-year while prices fell 9.8 percent during the year. Demand is strong. The national average months’ supply for single family rentals was 4.5 months in December compared to 6.2 months for homes listed for sale.”
Another important difference is the nature of the tenants. Single family rentals, usually stand-alone properties in ownership settings, appeal more to families. In fact, the typical SFR tenant is a family that has just left a foreclosure and can afford to pay the rent on a former foreclosure but could not make the mortgage payment on their old home, perhaps because they bought with alternative financing or purchased at the peak and could not get a modification when their home lost value. Over the past five years, foreclosures have turned more than 3 million homeowners into renters. Typical multifamily tenants, however, are younger, generally single and more mobile, and have never owned a home.
Khater found a strong relationship between distress sales markets and single family rentals. Census data shows a correlation between single family rentals and the hardest hit areas of the so-called “sand states”-Arizona, California, Florida and Nevada. Investors buying REOs and short sales in foreclosure markets convert them to rental units and homeowners in the same locale who have lost their homes to foreclosure rent homes that until recently were owned by other families who suffered the same ill fortune.
Written by: Steve Cook Mon, April 23, 2012
Though parents are ultimately responsible for keeping their children safe in their rental home, as a landlord, you can help make your property more kid-friendly. Take a look at these suggestions.
Make sure you meet code
Banisters and balcony railings are two places where children can meet deadly accidents. Check the code in your area to make sure that the banisters and railings on your property are an acceptable distance apart.
The EPA Residential Lead-Based Paint Hazard Reduction Act of 1992 requires disclosure of lead-based paint in all residential property built before 1978, whether purchased or leased. Besides the legal requirement, it is nice to be able to tell a prospective family that the paint on your property is lead-free. (If you need to remediate, be sure to contact a professional who will follow EPA guidelines.)
Outside the property
To help keep little runners safe, exterior stairs and walkways — foot-bridges especially — will be safer with the addition of non-slip strips.
Take care of large areas of darkness around the house, especially on walkways, with adequate lighting, perhaps with motion-sensitive activation.
If your property has a garage door, ensure the door will “bounce back” to keep a child from being crushed. (This is a fairly typical garage door feature.)
Make sure that any playground equipment is properly constructed with adequate padding and proper drainage.
If your property has a pool, make you know that the pool itself (including the drain) and the surrounding fence meet all local requirements.
Indoor safety
In bathrooms, install non-slip strips to the shower and bathtub. Also, to protect children from being scalded, adjust the water heater so that it is at 120 degrees, or below.
Though most housing laws are local, property owners are universally required to install working smoke detectors. Put them on the ceiling outside of bedrooms, the main living area and kitchen. Carbon monoxide detectors should also be installed, though all states or cities don’t yet require them.
To prevent fires or electrocution, be sure that rooms have adequate outlets so that a single outlet doesn’t get overloaded. All switch plates and outlet covers should be secure and without cracks or chips that little fingers could jam themselves or something else into. Ideally, parents will install socket safety plugs to keep children from playing with them.
Windows and doors
If there are blinds on the windows, be sure they don’t have looped cords, which can easily choke a child. Use cord wraps next to each window to keep cords out of children’s reach.
All the windows in your property should have screens, with child safety latches on the inside, as well as latches on the windows themselves. Window bars should swing open or break away.
Check that property doors open and close well and that locks work on entry doors. If you have a multi-unit property, make sure that any public doors require a key for entry or are otherwise monitored.
These are just a few of the things you might do to prepare your rental property for greater child safety. Think how impressed your prospective tenants will be to know that you thought ahead with a child’s well-being in mind.
Rentals.com
Nothing sells your rental property like a great photograph, so this is no area for shortcuts. Whether you hire a professional or decide to try these tips for yourself, make sure you get the shots that show off your rental property in its best light!
Hit the highlights
Just like anything you’re marketing, put your rental’s best face forward. Renters want to know how livable a home can be, so they will be especially interested in the areas they’ll spend the most time in that have gotten the highest traffic from previous tenants: the kitchen, living room, bathroom and bedrooms, especially.
Once you’ve covered the main areas, don’t forget to get a few close-ups of the amenities—new appliances, designer cabinets, or the brand-new sink in the bathroom. Whatever details give your rental character and appeal deserve a good photograph.
Go for high resolution
Even a pretty good digital camera (not your phone!) can produce great shots, if you take your time with the settings. On your camera’s menu, be sure to set it for the highest resolution you can achieve. Color saturation is the key, so be hesitant to use the flash if you don’t need it. Experiment with and without it to see which setting gives you the best depth of focus and room detail. You want the viewer to feel as if they are in the rooms themselves when they see your property photos.
Take multiple angles
As in life, every room has a different sense of place, depending on how you look at it. Try your rooms from each entrance and from different sides to see which shots give the best look and feel. Angles may be affected by natural light, so you might want to try different times of day, as well.
Be sure to go outside, too, to shoot the view from the main windows and get a whole-house exterior shot, as well as photos of the yard or deck.
If you have access to a 360-degree camera and know how to use it, the results can give potential residents the feel of actually being inside your property.
Don’t forget the power of a visual aid when it comes to marketing your rentals. Photographs are key, so take the proper steps to make sure yours make your property truly shine!
By Motoko Rich, New York Times News Service
The housing market remains a potent drag on the economy as home prices continue to slip, foreclosed homes fill some neighborhoods, and millions of construction workers scramble for jobs.
But one group is sitting pretty: landlords.
Unlike home prices, rents have been rising, up 2.4 percent in January from a year earlier, according to recent data, not adjusted for inflation, released by the Labor Department.
With few rental buildings erected over the past few years, available units are going fast. Nationwide, the apartment vacancy rate is down to 5.2 percent, its lowest level in more than a decade, according to the research firm Reis Inc.
Rent increases are greatest in places like San Francisco; Austin, Texas; and Boston, where technology companies in particular are hiring, as well as in New York City and Washington, D.C. But cities like Chicago and Seattle, where house prices are still declining quite sharply, have had rental increases, too.
“We are more of a renter nation than we have been for a while,” said Christopher J. Mayer, a professor of real estate at the Columbia University Business School.
Economists suggest favorable conditions for landlords will continue for at least a year, with employment gradually rising and apartment construction remaining constrained.
As job growth has begun to accelerate in recent months, young people are starting to move out of their parents’ homes or away from shared rooms and into their own rentals. Families who might previously have bought homes are also staying in rentals longer. They may be waiting for the housing market to hit bottom or finding it difficult to qualify for a mortgage.
Many others remain uncertain about their job prospects and wary of the obligations of ownership after the housing bust.
When Charles Griffith moved with his wife and two children to Orlando, Fla., last fall, they chose a new two-bedroom apartment for $1,140 a month. They left a four-bedroom, 2-1/2-bath house they had bought a decade ago in Antioch, Calif. His brother-in-law has moved in and taken over the mortgage payments.
Griffith, who works as a supervisor for Southwest Airlines, and his wife, a customer service representative for the airline, are enjoying the flexibility and convenience of renting, as well as amenities like a pool.
“We kind of like the situation now of not having to be under so much pressure,” said Griffith, 40, adding that the family may eventually buy in Orlando. But “with the economy and the airline industry, that factors into us thinking maybe we should hold off for a while.”
The home ownership rate has been falling from its peak of 69.4 percent in 2004, according to census data. By the fourth quarter of 2011, it was down to 66 percent. That means about 2 million more households are renting, said Kenneth Rosen, an economist and professor of real estate at the Haas School of Business at the University of California, Berkeley.
Not all those people are choosing apartments, of course. Some are moving into single-family homes left vacant by foreclosures. Eager to capitalize on the trend, investors are scooping up some houses at a deep discount and leasing them to tenants who have lost their own homes.
Several prominent hedge funds and private equity firms have recently announced plans to invest in distressed properties and convert them to rentals. And earlier this month, the government solicited applications from investors interested in buying pools of foreclosed properties held by Fannie Mae and Freddie Mac, as well as the Federal Housing Administration.
Investors could help the market by turning empty houses into rentals, said Diane Swonk, an economist at Mesirow Financial in Chicago.
“It can make the difference between a neighborhood being literally like Detroit — dead forever — or a neighborhood that has another chance at life,” she said.
Still, it is apartments, not houses, that are in the most rental demand.
Although many families crushed by the recession have doubled up and plenty of underemployed 20-somethings are living with their parents, some young people are finally getting their own space. Nearly 60 percent of job gains in the past two years have gone to people who are 20-34, a crucial rental group, according to an analysis of Labor Department data by G. Ronald Witten, a consultant to apartment companies.
During the economic downturn, apartment developers retrenched. The number of new apartments completed fell from 284,200 in 2006 to less than half that number in 2011, according to census data.
The limited supply is pushing up prices in some markets. In San Francisco, rents jumped close to 5 percent last year, according to Reis, and increases averaged 3 percent in Austin and New York. Landlords have also been withdrawing incentives like a free month’s rent.
Liz Brent and Matt Mochizuki moved into a studio apartment a year ago in the Mission District in San Francisco for $1,395 a month. Now they want more space.
Brent, 26, makes costumes and is working as a barista at a cafe where customers leave big tips. Mochizuki, 27, has a steady job with a metal fabricating studio. They are budgeting $1,800 a month in rent.
But at an open house for an apartment billed as a one bedroom, they found a studio with an awkward layout and bad light. More than 40 people were in line, many ready to hand over a check.
“That’s what the market is like now,” Brent said of her fruitless search. “That’s how many people showed up for this tiny apartment with no windows.”
A few metropolitan areas are experiencing a much softer rental market. In Atlanta, owners of vacant condos are lowering rents to attract tenants, and in Las Vegas, homes are taking six weeks to lease and rents are still well below their peaks, said C. Terry Robertson, broker of Desert Realty.
Orlando might seem an unlikely place for rental strength. The unemployment rate, at 9.7 percent, is higher than the national average, and home prices slipped 4.6 percent last year, according to the Standard & Poor’s Case-Shiller home price index.
Yet Ric Campo, chief executive of Camden Properties, a real estate investment trust that owns apartment buildings, said rental business was brisk at its LaVina development. Since the office for the 420-unit complex opened last summer, more than half the apartments have rented.
That’s “a faster rate than we’ve ever seen in Orlando,” Campo said. The company has raised the base rent on a two-bedroom apartment to $1,080, from $995 a month.
Many are left to wonder whether the housing collapse has had a more profound effect.
“I think it’s going to be interesting to see whether there’s been a fundamental sociological shift in that 20-35 year old cohort, where they literally say ‘this American dream just doesn’t work for me,”’ said Brad Forrester, chief executive of the ConAm Group, which manages about 50,000 apartments in the western United States.
Matt Byford, a 24-year-old litigation consultant in Chicago, is certainly in no hurry to buy. He has been renting in the Lincoln Park neighborhood since his college days.
Given the low purchase prices and record low interest rates, Byford acknowledges that the financial scale probably tips more toward buying than renting. “Since I can pretty much assume with confidence that it’s not going to go anywhere,” he said, “I don’t necessarily have a sense of urgency.”
The average rate on the 30-year fixed mortgage dropped to the lowest since records have been kept, creating a tempting target for people to refinance their homes.
Freddie Mac said Thursday the average rate on the 30-year fixed mortgage hit 3.87 percent, down from 3.98 percent the prior week. That’s below the previous record of 3.88 hit two weeks ago.
The average on the 15-year fixed mortgage fell to 3.14 percent, also a record low. Records for mortgage rates
date back to the 1950s.
Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.
Mortgage rates have hovered near 4 percent for the past three months, and have perhaps contributed to a slight improvement in the housing market. But many homeowners remain underwater and the pipeline of foreclosures continues to be huge, putting heavy pressure on housing prices.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.
Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.
Builders are hopeful that the low rates could boost sales next year. But so far, they have had a minimal impact.
Mortgage applications have risen slightly over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.85 percent. The average on the one-year adjustable loan rose to 2.76 percent from 2.74 percent.
The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable
The Associated Press contributed to this report.
Since the market downturn several years ago lawmakers in Washington have been talking about reforming the secondary mortgage market but nothing has come out of Congress yet. This year, though, a lot of progress is expected to be made toward reform, so it will be especially important for real estate brokers and sales associates to stay engaged in what’s happening, particularly this spring.
Although we’re still waiting for legislation to come out, lawmakers have been working on the issue quite a bit. Four bills have been introduced that would take a comprehensive approach to reform, including a bill by Rep. Gary Miller (R-Calif.) that very closely matches up with NAR’s priority, which is to encourage private investors to return to the secondary market while replacing Fannie Mae and Freddie Mac with an entity that continues to back conforming loans but as a nonprofit, not as a for-profit company.
NAR wants the federal government to keep a presence in the market out of a concern that mortgages remain available and affordable even in bad markets, when it’s too risky or not profitable enough for purely private participants to be counted on.
Sen. Johnny Isakson (R-Ga.) also has a bill out that matches up with NAR aims in many respects, and the association is working with the senator and his staff to refine his approach this spring. In a key point about his bill, it would define conforming loans as those that are based on sound underwriting, not on the amount of downpayment.
That’s important, because banking regulators have drafted Wall Street reform rules that would define conforming loans—what they call qualified residential mortgages (QRM)—as those that meet minimum downpayment requirements and other standards. NAR and others have been vocal about how bad that would be for the market, and the Isakson bill would address that.
In addition to these and a couple of other comprehensive reform bills, lawmakers have introduced 19 other bills that look at specific aspects of reform. NAR has never come out in support of any of these single-issue bills because it wants reform to be comprehensive, not piecemeal. All of the aims of these many bills will get looked at and, as NAR would like to see it, folded into a comprehensive bill where that makes sense.
So, a lot will be going on in the next few months, and NAR members can expct to hear more shortly. But whether all of this activity results in a single bill for a vote this year is uncertain. For one thing, starting around summer lawmakers will begin focusing on the upcoming national elections, so that could mean putting off a big vote like this until 2013, when the dust from the elections has settled.
But that’s all the more reason NAR members have to be engaged now. Because even if legislation takes until 2013 to pass, key decisions could be made in the next few months.
You can learn more about what to expect on reform in the 6-minute video with NAR analyst Tony Hutchinson.
The housing sector will likely take incremental steps forward in 2012, though total originations will fall on fewer refinances, according to economists at Fannie Mae.
The second half of the year should outpace the first six months in terms of growth, though fiscal policy and political uncertainty in Washington will likely drive consumer and business activity, the mortgage giant said.
Chief Economist Doug Duncan said positive consumer activity and challenges in housing and the global economy will equate to moderate growth for the year.
“We’re entering 2012 with decent momentum, especially on the employment side, which is fostering positive household and consumer behavior,” Duncan said in a release. “Unfortunately, we expect this momentum to slow as we move through the first half of the year.”
The report released Friday forecast total home sales to increase 3.5% to about 4.74 million in 2012 from 2011 with another 5% gain in 2013 to nearly 5 million. New home sales could jump 10.4% for 2012.
The Federal Housing Finance Agency home sales price index, excluding refinances, could dip 1.1% for 2012 from a year before, according to the forecast. Economists predicted the 2011 index would finish 4.6% lower than 2010.
Mortgage originations as dollar volume could see a decline as well in 2012, largely on a steep drop in refinances. The Fannie report said total originations will fall to $1.01 trillion in 2012 from a predicted final 2011 tally of $1.36 trillion. Economists expected refinancing to plummet to $540 billion from $894 billion.
Purchase mortgages, however, will rise to $471 billion in 2012 from a estimated 2011 total of $464, according to the report.
Total single-family outstanding mortgage debt will likely drop 1.3% to $10.14 trillion in 2012.
For the U.S. economy as a whole, Fannie researchers predicted real GDP would increase 3.3% in the fourth quarter to finish the year at 1.7% growth. Economists forecast 2.3% GDP growth for 2012 and 2013.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Freddie Mac recently released the results of its Primary Mortgage Market Survey®, showing mortgage rates easing to new all-time record lows for all products covered in the survey helping to keep homebuyer affordability high. The average for the 30-year fixed mortgage rate has been below 4.00 percent for six consecutive weeks.
The survey concluded that the 30-year fixed-rate mortgage averaged 3.89 percent, with an average 0.7 point for the week ending January 12, 2012, down from last week when it averaged 3.91 percent. Last year at this time, the 30-year FRM averaged 4.71 percent.
The 15-year FRM this week averaged 3.16 percent with an average 0.8 point, down from last week when it averaged 3.23 percent. A year ago at this time, the 15-year FRM averaged 4.08 percent.
Additionally, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.82 percent this week, with an average 0.7 point, down from last week when it averaged 2.86 percent. A year ago, the 5-year ARM averaged 3.72 percent.
Results showed that the 1-year Treasury-indexed ARM averaged 2.76 percent this week with an average 0.6 point, down from last week when it averaged 2.80 percent. At this time last year, the 1-year ARM averaged 3.23 percent.
“Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” says Frank Nothaft, the vice president and chief economist of Freddie Mac. “Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated.”
For more information, visit www.freddiemac.com
Once you have invested in a rental property, the responsibility of maintaining and running the property can quickly become overwhelming. For many landlords, the logical solution is to hire a property management company to oversee their rental property. But is this the right decision for you? Here are several issues to consider.
- Do you have what it takes to run a rental property? If this is your first foray into property management, you could find yourself in over your head. Collecting rent may sound easy, but in reality, it can be more like a painful extraction. If you are not familiar with rent collection, you can quickly find that your tenants are taking advantage of your inexperience. In addition to rent collection, day-to-day maintenance of a rental property can be tiring. If you are not operating your property as a full-time job, you may not have the time to address tenant concerns and repairs in a timely manner. This may make hiring a property management company an excellent choice.
- Where is your rental property located? If you have purchased a rental property near your home or place of business, you’ll be able to keep an eye on the property. However, if your rental property is far away, you’ll be loath to travel to it to deal with the inevitable problems that arise. If you’re unable to check on the property on a regular basis and handle any issues that may arise, finding a local property management company can mitigate these concerns.
- Does the property need frequent visits, repairs, or attention? If your rental property is a veritable money pit, you can find yourself spending more time there than at your regular job. If you’re getting constant requests for repairs to a property, having someone who can devote the majority of their time to your property is very helpful. The more units you have, the more you can benefit from a professional maintenance worker or property management company.
- What services do you need? If you’re looking for a small amount of assistance, such as monthly rent collection, a full-service agency may be too much for your needs. Since you’ll need to budget in the fees charged by a property management company, this will cut into your profit margin. Therefore, instead of hiring a full-service company, you may be better served by a part-time property manager or specialist who can handle the most frequent problems. On the other hand, if you do need a complete solution, make sure that the company can provide you with all the services you require. For example, if you need someone who is capable of light maintenance work in addition to rent collection, keep this in mind while you shop for a property management company.
- Is the company trustworthy and friendly? Before hiring a property management company, do thorough research to ensure that it is reputable. If you are an absentee landlord, this is extremely important. You will be relying on this company to collect rent and represent you and you interests. Check references and talk to other landlords who have worked with this company. Make sure the representative of the property management company is level-headed and diplomatic. Just one bad interaction between tenant and rent collector can destroy goodwill that can take years to restore.
The Market for Residential Property Management today…. Executive Home Rentals
It has been well-documented that there is a shift in the marketplace from home ownership to simply renting. For the renter, the limited commitment to a specific location and the losses that many have experienced as prior homeowners has caused a national shift in how individuals look at the investment in home ownership. There has been an increasing demand for rental properties and rental rates have experienced a 5% per year growth rate over the last few years.
In addition to these changes in behavior, large players in the housing market have identifi ed this trend and are actively working to provide more opportunities for investors to tap into the rental real estate market. The Federal Housing Finance Agency (FHFA) is working with Freddie Mac and Fannie Mae on an REO Rental Program and Bank of America recently announced that they are developing a similar program to sell foreclosure properties to investors for the purpose of having those properties rented. Residential property management and single family property rentals are
amongst some of the fastest growing real estate opportunities in America. Record numbers of defaults, foreclosures, residential downsizing, and family consolidations have created a huge demand for innovative Property Management services.
In 2011 Executive Home Rentals (EHR) brought innovation to the field of real estate. You’ve probably heard about their unique “Lease Your Listing Program,” designed to save homeowners, renters, real estate investors, and real estate agents time and money…well they have taken this concept to a whole new level. Combining there team’s 30+ years of property management and franchising expertise, this past December, they launched a franchise system that caters specifi cally to individuals with a real estate licenses or background. is exciting franchising opportunity gives individuals the training and support for greater probability of success, features an affordable start-up price, plus the ability to open for business in approximately 60 days.
EHR has developed a complete property management solution whereby it provides its franchisees with a turnkey
operation, from the collection of tenant rent amounts via EFT, to preparing reconciliations for each property owner’s invoice monthly, and remitting payment monthly back to all the property owners. Franchisor and selected approved vendors provides services to the entire system. Understanding that maintenance of the property represents a large portion of the time spent by all property management companies , EHR has contracted with a national maintenance service company to provide 24/7 support and coordinate repairs and maintenance on behalf of property owners and there franchisees. By the Franchisor effectively managing the flow of funds and the maintenance management, franchisees can focus their time of leasing new properties to tenants and contracting with new property owners for their inventory.
If being in business for yourself but not by yourself and utilizing a turn-key business model sounds like something
you’re interested in, then you owe it to yourself to learn more now. They have 24 Colorado franchise territories to award, to individuals that want to get in on the action of this rapidly growing home rental market.
Feel free to contact Jon Rivera President of Executive Home Rentals at info@homesirent.com or at 303.988.9999, with questions or comments.
Looking to rent your Colorado home, but don’t know where to start?
Executive Home Rentals Property Management Company will:
- Find you a qualified tenant
- Advertise your home throughout CO and the US
- Complete background checks on all applicants
- Maintain your home as if it where ours
- Handle all tenant and maintenance requests 24/7
- Collect and disperse all rents electronically every month
For a your FREE Home Rental Analysis, Call 303-988-9999
Executive Home Rentals Property Management System was developed to eliminate the the two biggest hassles of being a property manager: Maintenance & Repair and Rent Collection.
Maintenance & Repair:
- All property maintenance and repair requests are handled 24/7 by our Customer Service Representatives
- Maintenance and repair vendors are thoroughly screened and managed by our Maintenance Division Experts with no liability or expense for the franchise
- All maintenance billing and accounting issue are managed by our Business Services team
Rent Collection:
- Convenient monthly electronic fund transfers that automatically collect and disburse rents from tenants to owners
- All financial accounting and homeowner statements managed by our Business Services team
Residential real estate is not rocket science. We know that this housing crisis is:
1. Explainable – bad lending, mad speculation, wild expectations, government meddling
2. Isolated – bad mortgages, negative equity, strategic default, government meddling
3. Temporary – demand for housing always catches up to supply eventually
Anyone with any experience and perspective will agree that this market will recover over the next 10 years, but what will this particular recovery look like? Since the root of the problem was unprecedented, the solution might be as well.
My belief is that renters are going to solve the housing crisis.
Home ownership rates have fallen by a few percentage points, which has translated into more than four million new rental households in just the past few years. According to the Census, 1.4 million of those were added between July 2010 and June 2011, showing that this trend is accelerating.
As a result, rental rates are growing at more than 5% per year, and this trend is also accelerating.
As a result of this, investors are pouring capital into American housing with a long-term mindset, kicking this trend into hyperspeed.
This crisis will not be solved by enticing home buyers. Their confidence is waiting for unemployment to come down and government to act responsibly, which could take a while.
But investors are confident right now. Why? Because they see the big picture. Rental demand equals stable cash flow. So what can be done to encourage them?
How about eliminating archaic waiting periods for investors who want to buy foreclosures? How about eliminating waiting periods for investors who paid cash and want to tap it with a refinance? Today they have to wait months to put that money back to work. Why not eliminate the overall bias against investors in FHA, Fannie Mae and Freddie Mac and require big down payments to make it safe to lend, and lend.
Better yet, keep your eyes peeled for a private sector player to seize this opportunity to create America’s first national investor mortgage brand. The estimates are that half a million investor loans close every year, and who owns that niche? No one.
The Martial Arts teach you how to use the weight and momentum of your opponent against them (or so they say in the movies). This is the same thing. This drastic increase in rental demand is a by-product of the foreclosure crisis. Use it against the crisis by turning it into positive cash flow investments for those willing to be confident and take a risk in this environment.
Burn off that shadow inventory and create housing options for newly minted renters, which will, in turn, stabilize rental rates, and everybody wins. Good credit renters and buy-hold investors will be the heroes at the end of this saga.
Greg Rand is CEO of OwnAmerica.com and former managing partner of Better Homes and Gardens Rand Realty.
After half a decade of withering sales and slumping prices, there are strong and diverse signs that the single-family housing market is poised for a rebound. In some metropolitan areas, the market has bottomed, with both sales and prices on the rise and foreclosures on the decline.
Industry analysts and players cite a number of reasons – some traditional (employment), others unique to the post-credit bubble era (foreclosures) Â - for the long-awaited sea change. An analysis of industry and government data also support the forecast.
Proponents admit that the nascent rebound could easily be derailed, but stress that after years of government efforts to support sales and prices as well as the volatile impact of foreclosures, the market has regained a measure of normalcy.
“With the exception of really hard-hit markets, the vast majority is ready to turn around,” adds Jerry Howard, president and CEO of the National Association of Home Builders, NAHB. “The Washington, D.C., area is not only ripe for recovery, they need to start building units.”
Nevertheless, skeptics overwhelmingly outnumber the optimists, given the false-starts of previous years, the economy’s sub-par performance, a new wave of distressed properties and the capacity for the European debt crisis to spook business, consumers and investors.
“I think it’s premature,” says Richard Smith, CEO of Realogy, the nation’s largest real estate company, whose brands include Century 21, Coldwell Banker and Sotheby’s International. “We see little indications here and there. Transaction volume is improving. Prices are still under pressure. This isn’t going to be one of those spiked robust recoveries.”
Smith is echoing the conventional industry calculus: that price increases follow sales growth amid consistently strengthening demand.
There’s been little conventional, however, about this housing slump, which is one reason it’s had so many false bottoms. Among its many firsts – housing starts fell through 1 million annual units, foreclosures topped 2 million in three consecutive years, and home prices declined on a national basis.
The catalysts to recovery are mostly the same: for potential buyers, residential rents have now risen enough to consider buying; existing-home inventory is the lowest in five years, while that of new homes is at a 40-year low; affordability is at a record high; delinquencies have peaked;consumer confidence is on the rise ; and job growth is accelerating.
For investors, with a continuation of the gold rally in question, real estate is beginning to look like a viable inflation hedge alternative, while rising rents mean greater profits.
That thinking may help explain why the iShares Dow Jones US Home Construction Index Fund(NYSE Arca: itb), a broad barometer for the housing market, is up some 38 percent from the stock market’s October bottom, while the S&P 500 is up about 21 percent.
Finally, there’s the intangible fatigue with bad news, and a desire to end the negative feedback loop.
“We believe there is sizable housing demand that could be released into the market,” says Lawrence Yun, chief economist of the National Association of Realtors, NAR.
The NAR is forecasting existing home sales will rise 5 percent in both 2012 and 2013; prices will edge up 2 percent in each of those two years, then 4 percent in 2014.
The NAHB is forecasting a 5.1-percent increase in new home sales and a 10-percent increase for new home starts in 2012.
Are you ready to transition your rental home from the old year to the new? Read on for tips on gearing up for a holiday celebration and getting next year off to a clean, new start.
Cold-weather preparations
As you prepare to host family and friends for the holidays, make sure that your rental home is up to the change in weather. Help keep out drafts with weather stripping at exterior doors and windows. Switch ceiling fans to a clockwise rotation so warm air that rises to the ceiling is pulled down for you to enjoy. Also, check out your chimney before you begin to use the fireplace for the season. (You may need assistance from your landlord or rental management company for this.)
Decoration check
Before you get ambitious with your holiday decorations, you’ll want to check in with your landlord to make sure it’s okay to hang garlands and lights, if they are part of your holiday season. Also, find out if there are any concerns about putting out large lawn decorations, in case your neighborhood is restrictive about such things. Once you’ve got the all-clear, have a ball using the space of your rental home, inside and out, to celebrate the holidays just the way you enjoy.
When the celebration’s over
Once house guests have gone and the holiday celebrations have passed away with the old year, it can be hard to find the energy to put everything back in order. Your first step, as with any organizing project, is to put everything back where it belongs. If you don’t already have them, purchase bins to store artificial wreaths, lights and all of your holiday decorations safely away until next year.
Consider buying storage containers for particular items in your decorative arsenal. An ornament organizer, for example, has separate storage spaces for each fragile piece so that you don’t have to worry about whether it will survive for next year’s tree. Wrapping material cases let you store gift paper in one compartment, ribbons and bows in another, and cards in their own special place. And special dishware can go into china keepers to be safely stored until the next feast.
Recycle what you can
To start the new year in the green, try to repurpose as much of the holidays’ byproducts as possible. If you have sections of wrapping paper that survived the gift-giving frenzy, roll them around an empty paper towel spool and fasten with a paper clip to be used next year. Gift bags can also keep on giving. Keep yours in good shape till next year by folding them flat and storing smaller bags inside larger ones. Why not save ribbons and bows, as well?
Removing the tree
Don’t put your holiday greenery in the garbage can! Check your local government Web site, scouting organizations or non-profits for information about ways to recycle your tree. Often, municipal yard waste pick-up is expanded to include trees for a specific period of time. If you can’t get curbside rescue for your drooping tree, check for a post-holiday chipping service, often found at home improvement stores.
There is a lot to do to see out the old year and prepare for the new one in your rental home. Get started now so that you’ll have everything you need to enjoy the holidays fully — and then put them neatly away when they’ve passed!
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