Will Increased Housing Prices Bring More Renters To The Market?

Will Increased Housing Prices Force More Renters To The Market?

By Emilio DiSpirito Realor/iHeartradio Show Host "The Round Table Real Estate Simplified"

www.EmilioDiSpirito.com 401-359-2338 Email Emilio DiSpirito Here

January 2016

Housing Markets like San Francisco, San Jose, Seattle, New York City & Boston to name a few on a long list are right around where they were in 05', 06' & 07'... our last real estate market peak. With that said, the rest of the country should follow suit so long the US is not effected by international events like China's current housing and stock market crisis.

WATCH THE VIDEO BLOG HERE!! FIND OUT IF INCREASED REAL ESTATE VALUES FORCE MORE RENTERS TO THE MARKET!

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We've had 4 straight years of overall residential real estate price gains in the United States and specifically Rhode Island. The National Association of Realtors anticipates prices to gain 8%+ in 2016 over 2015 Nationwide. Recent & Current homeowners will enjoy a fine equity position while the ones who were underwater should be able to break even and sell without taking a loss or having to do a short sale, deed in lieu or foreclosure. Basically if your home was worth $300,000 in 2015 you might be looking at $324,000 in 2016. Call me at 401-359-2338 or click here for an accurate fair market value for your property. 

(Congress EXTENDED a provision that helps home owners short sale!)

Unlike the mid 2000's when we were on our way to the recession because of fraudulent activity with the banks lending out monies with no income verification to many folks who they know could not pay back the note, this market is supported by American's income and low interest rates. In fact the 40 year average rate is just around 8.5%... Anything under 8.5% is a very good rate to purchase a home!! We are currently for the most part around 4% and should remain under 6% throughout 2016. 

The job market has gained over 300,000 new jobs in December 2015 alone and our economy aside from the stock markets and oil prices taking a huge dive.. (which yes these may effect us and could cause us to reach this market apogee - We will discuss this later in the show) the overall housing market seems to be in check for the time being. 

Home prices are growing at a higher than expected rate because of lack of inventory involving new construction and existing homes listing for sale on the market. This is making it the most opportune time since 2007 to sell a home because due to low and sometimes no competition in neighborhoods, home sellers are getting a premium for their properties. Check out www.TrustTheDove,SmartHomePrice.com for your properties current market value. 

With increased home pricing and value will come higher rents. It's basic really, if you buy a property at a higher cost, you are going to hand that cost off to your tenants while maintaining a healthy profit margin. It's practical business sense really. 

(So WHY are 83% of Renters Who WANT to Own NOT Buying?)

Now lets mix the increased housing cost with an all time low for vacancies and no such thing as having to charge a "fair market rent" and you also get increased rents.. You may ask.. What is causing low vacancies? Millenials are starting to leave their parents homes and are becoming a healthy and vital part of our work force and economy, folks who were foreclosed on who are still unable to buy, lack of new construction being built, low inventory for existing home sales and empty nesters looking to downsize and rent have all come to the rental market in need of housing. Supply and demand has increased on rental units and will continue to, thus making it more affordable to purchase a new home, thus driving the number of first time or returning home buyers increasing the number of properties sold and home increase prices in 2016!!!

See how that all ties in!?

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Ok Lets Sum up!

"Will Higher Home Prices Bring More Renters To Buy?"

The answer is YES RENTS WILL CONTINUE TO RISE AND MORE RENTERS WILL COME TO THE MARKET TO BUY! & Here is why!

• Landlords paying more for properties will pass higher costs on to renters causing a shift in market rent pricing
• Landlords will also pad their profit margin to maintain a healthy position
• Lack of rental inventory and all time vacancy lows due to the number of people in need of rentals are increasing the cost of rent.. who are these people?
• Millennials are leaving parents homes and becoming a vital part of the work force
• Buyers who lost their home to foreclosure in the bust of 2008 and later - (By the way if this is you or someone you may know.. You might be able to buy.. Lets discuss!)
• Lack of New Construction for current buyers. Lack of existing homes on the market.
• & Empty nesters looking to downsize and get out of home ownership
• According to RentJungle.com the Average 2 bed rent in 2009 was $953 and as of Oct 2015 it was $1309!! That's a $356 increase aka 27.2% increase!! Where will that 2 bed apartment be at the end of 2016? $1400 per month? Why not own a 3 bed 1.5 bath for $1400 a month in a nice neighborhood?! 

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