More Apartments and Fewer Housing Starts

Apartment constructionThere have been some reports showing that across the country there are more apartment starts and fewer housing starts. Relatively speaking, developers are building more rentals than they have in the past and starting fewer owner-occupied homes than in the past.

There Are Fewer Homeowners in America Today

Sadly there are fewer home owners in America today. The 2008 financial crisis ended the dream of home-ownership for many Americans who secured residential mortgages they could not afford. Should they have been renting? Perhaps. Should they have purchased homes within their budget instead of over-leveraging themselves? Absolutely. These individuals need places to live now and can only qualify to rent because of a short sale or foreclosure on their credit history.

Home Loans are More Difficult To Obtain

Post-financial crisis banking practices have made it more difficult to qualify for a mortgage. The threshold for qualification was raised so that only the most credit worthy can obtain a loan for a home. Good, bad, or otherwise that is the reality and many are choosing to rent to improve credit scores, and save down payment cash to have a second chance at home ownership.

Institutional Level Investments in Rentals

Large cash holding companies (Hedge funds) are looking for ways to invest in the lucrative residential apartment rental development business. The capital investment rates of returns are much better than they would see from other investment vehicles, and there is a long term stability in the rental market presently. As banks acquire homes via foreclosure they are converting them into rentals instead of selling them to small individual investors. Large institutional investors are following that trend and building apartment complexes instead of renting out their empty assets.

Interested in learning more about the housing market? Call me and lets talk!

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