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Category: News

Rising Interest Rates Have Not Dampened Demand

Since the beginning of the year, mortgage interest rates have risen over a half of a percentage point (from 3.95% to 4.52%), according to Freddie Mac. Even a small rise in interest rates can greatly impact a buyer’s monthly mortgage payment.

First American recently released the results of their quarterly Real Estate Sentiment Index (RESI), in which they surveyed title and real estate agents across the country about the impact of rising rates on first-time homebuyers.

Real estate professionals around the country have not noticed a slowdown in demand for housing among young buyers; nearly 93% of all first-time homebuyers last quarter were between the ages of 21-35, with the largest share of buyers (51%) coming from those ages 26-30.

First American’s Chief Economist Mark Fleming had this to say,

“On a national level, mortgage rates would need to hit 5.6%, 1 percentage point above the current rate, before first-time homebuyers withdraw from the market.”

So, what is slowing down sales?

According to the last Existing Home Sales Report from the National Association of Realtors, sales are now down 3.0% year-over-year and have fallen for the last three months. If rising interest rates aren’t to blame, then what is?

Fleming addressed the cause, saying that:

“The housing market is facing its greatest supply shortage in 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. The ongoing housing supply shortage will make it difficult for first-time buyers to find a home to buy, even when they are financially ready.”

Bottom Line

First-time homebuyers know the importance of owning their own homes and a spike in interest rates is not going to keep them from buying this year! Their biggest challenge is finding a home to buy!

August 2, 2018
Will Housing Be Affected With A Future Recession?

Some experts are calling for a slowdown in the economy later this year and most economists have predicted that the next recession could only be eighteen months away. The question is, what affect will a recession have on the housing market?

Here are the opinions of several experts on the subject:

Ivy Zelman in her latest “Z Report”:

“While economic activity appears to have accelerated so far in 2018, some prominent economic forecasters have become more cautious about growth prospects for 2019 and 2020…

All told, while solid long-term demographic underpinnings support our positive fundamental outlook for housing, in the event micro-economic headwinds surface, we would expect housing transaction volumes and home prices to weather the storm.”

Aaron Terrazas, Zillow’s Senior Economist:

“While much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn.”

Mark Fleming, First American’s Chief Economist:

“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”

Mark J. Hulbert, Financial Analyst and Journalist:

“Real estate may be one of your best investments during the next bear market for stocks. And by real estate, I mean your home or other residential properties.”

U.S. News and World Report:

“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”

One of the most common questions I get from my clients is. “Where is the real estate market headed”?

What we do know is that demand for housing is high right now, in both the residential rental and buyer markets. After all, no matter what else happens with other sectors of the economy, people still need a place to live. Investors from around the world recognize this fact and these investors play an important role in the real estate market. Until we see a balance between supply and demand, I believe we will continue to see an appreciating market. Once this balance is achieved, we may see a leveling off of pricing.

I value your thoughts on this subject. Please send me an email with any other points of view that you care to share and I may include them in an upcoming post.

July 19, 2018
May 2018 Newsletter
Why Home Prices Are Increasing

There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient(data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart below).

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.
13 Simple DIY Home Maintenance Tips & Ideas

It’s tempting to disregard the steep price tag and hire a professional contractor for home improvement repairs rather than doing them yourself. Home repairs can seem complex and intimidating to the uninitiated, and fear that your own attempts at fixing that leaky faucet or drafty window will cause further damage may further discourage you from going DIY.

However, having a home maintenance plan can make a huge difference in your bank account. And, fortunately, performing proper home maintenance does not require a lot of specialized know-how or training, nor does it require a lot of time or money.

Simple Home Maintenance Tips

1. Toilets

Water leaking from your toilet tank will not only cost you money when it comes to your utility bill, but it can also cause water damage to your bathroom floor and premature wear of your toilet’s internal workings. To find out whether your toilet tank is leaking, add some red food coloring to the water in the tank. Come back in about an hour and see if the water in the bowl is pink. If it is, you have a leak.

If you find that your toilet is leaking from the tank to the bowl, the flapper needs to be replaced. To change your toilet’s flapper, first shut off the water supply to your toilet. To do this, simply turn the water valve located directly behind the toilet. Remove the tank lid and flush the toilet in order to empty the tank. Use a towel or sponge to mop out any excess water left in the tank. Remove the flush chain from the lever, and then slide the old flapper up off the overflow tube. Slide the new flapper in place over the overflow tube, reconnect the chain, and turn the water supply back on.

2. Faucets

The main cause of leaky faucets is worn out washers. The washers inside of the faucet handles are rubber and tend to wear out quickly. Replace them by turning off the main water supply, unscrewing the leaky handle that controls the flow of water to the spout, removing the old washer, and dropping in the new one.

3. Washing Machine & Dryer

It is important to regularly inspect your washing machine water supply hoses for leaks. One of the top reasons for insurance claims is for water damage caused by leaky washing machine supply lines. Inspect washing machine water supply lines at least annually and replace them every three years if they are plastic. If you notice that the metal ends of your water supply lines are discolored or rusty, replace them immediately.

Faulty washing machine drain hoses are as important as water supply lines when it comes to keeping water off of your floor and in your drain where it belongs. As with supply lines, regularly inspect the ends of your washing machine drain lines for discoloration or rust, and replace them immediately if you find evidence of leaking.

Additionally, check the snugness of the drain lines by using a crescent wrench or a pair of pliers. You should not be able to tighten the line any further if the line is properly tightened. Plastic lines should be replaced every three years.

When it comes to your dryer, it is important to make sure that you regularly clean your lint screen in order to prevent fires. Not only will a clean lint screen prevent fires, but it will also increase the life of the heating element. Physically remove the lint from the screen between each load of laundry. Also, be sure to remove fabric softener residue by washing the screen with warm water and dish detergent once per week.

4. Water Heater

There is nothing more frustrating than turning on the hot water in your shower and instead receiving cold water. Water heaters, like other appliances, need maintenance to increase longevity and reduce the possibility of damage.

Water has sediment suspended in it, and as the water sits in your water heater, these particles will often settle to the bottom of the tank, causing damage to the floor of your water heater. At least once per year, drain the water from your water heater and clean the inside surface of its floor.

To drain your water heater, first turn off the water supply and power to the water heater. For electric water heaters, turning off the power means that you simply flip the circuit breaker to the “off” position. For gas water heaters, turn the thermostat setting to the pilot position.

Next, connect a water hose to the drain fitting at the bottom of the tank and put the other end in a place, such as your driveway, where the draining hot water won’t cause any damage. A typical garden hose is a direct fit to the drain fitting. Turn on all the hot water faucets in your home and then open the drain valve on the water heater. Turn the water supply back on with the drain valve still open to remove any built up sediment in the bottom of the tank. Then close the drain valve, refill the tank, and turn the power back on.

5. Plumbing

In order to keep water flowing freely through your pipes, keep the following things in mind:

Accumulating fats and oils are the main cause for clogs, so never pour fats or other oils down your drains. This includes oils that are not solid at room temperature. If you accidentally spill oils or fats down the drain, run hot water down your drain along with a healthy serving of dishwashing liquid. The soap will emulsify the fat or oil and move it on down the pipe, preventing a clog.

Get a hair strainer for the bathtub drain. If fats and oils are the main source of clogs in the kitchen, hair is the primary culprit in the bathroom. If you have a strainer, make sure that you remove any accumulated hair from it following each shower. This will reduce the amount of hair that finds its way through the strainer and into your plumbing.

Skip the Drano. Though the acids it contains can help unclog a drain, they also cause significant damage to your plumbing, including premature leaking. This can lead to costly repairs later on. If your bathtub or toilet is completely clogged, use a small drain snake – which you can purchase at any hardware outlet – to pull the offending clog to the surface. If your kitchen sink is clogged, try plunging it before trying to snake the drain. If you cannot remove the clog using a drain snake, call a professional.

6. Air Conditioning

Air conditioners are among the most overlooked appliances when it comes to performing regular home maintenance. However, they can be one of the most costly appliances to repair.

Regularly inspect the condensation hose to make sure that water can flow freely from the line. If there is standing water where your condensation line drains, create a drainage path using a small garden trowel and line the path with gravel to keep mold and algae from forming, which can be a serious health hazard when the spores are drawn into the appliance and blown into your home.

Additionally, keep the screen around your air conditioner free from debris to keep air flowing easily. This will prevent your air conditioner from using more power than necessary to keep your house cool and keep the internal parts from wearing out too quickly.

7. Humidifiers

Some climate control systems have in-duct humidifiers that help keep air moist and healthy during the winter when artificial heat systems are in use. But when these systems aren’t working properly, they become a breeding ground for mold and bacteria, which can cause serious air quality issues.

At the end of each winter season, it is important to drain the unit and close the water valve to keep water from stagnating in the system. Also, cleaning the reservoir with a mixture of water and white vinegar helps to keep mineral deposits to a minimum.

8. Air Filters

Change the air filter in your central heat and air unit often, especially during peak usage months. Thirty days is the absolute longest you should ever leave an air filter in place; two weeks is maximum for high-usage months.

Using cheap fiberglass filters is actually preferred as opposed to more expensive HEPA filters for two reasons: First, replacing the more expensive filters often isn’t cost-effective. Second, the fiberglass filters actually allow for more air to flow into your climate-controlled unit, reducing the amount of energy needed to effectively heat or cool your home.

9. Paint

You can easily give your house a facelift by repainting the interior. However, repainting the entire interior of your house can be costly and difficult to accomplish. You can save both time and money by strategically touching up your paint job every so often. The first thing you need is a spot-on color match. The only way to get this is to save paint from your current paint job for future touch-ups. If you have leftover paint, simply roll the paint over the dirty spots on your walls. When the paint dries, it will dry perfectly, leaving you with a wall that looks as though you just painted it.

If you don’t have any leftover paint, you can still touch up your walls, though your efforts will be more labor intensive than spot painting. Take a sample of your color to your local hardware outlet and have your paint tinted to match. When you are ready to touch up your walls, paint the dirty wall from corner to corner, being careful to keep the new paint off any surface you aren’t looking to touch up. If there is a shade difference, you won’t notice it, even if the wall you are painting butts up against another wall.

If you are trying to cover up nicotine-stained walls, you will need to apply a stain blocker to the walls before applying paint. Nicotine will prevent your paint from adhering properly to the wall surface and will cause bubbles. Additionally, if stale smoke or other odor is an issue, add a few drops of vanilla to your paint. This will help combat odors that have seeped into your drywall.

10. Refrigerators

The main component of your refrigerator that should get your attention is the door seals. Keeping your door seals tight will reduce the amount of energy it takes to keep your food cool or frozen, but will also keep your refrigerator working efficiently, preventing premature wear on internal parts.

To test the door seals, close the door on a dollar bill and attempt to pull it out with the door closed. If you cannot easily pull the dollar bill out from the door, your seals are in good shape. However, if the bill slides out without much resistance, it’s time to replace the seals. You can purchase new seals from any home repair outlet store.

Also, if you have a refrigerator that has coils along the back, periodically vacuum these coils to remove dirt and dust build up. These coils contain the coolant the refrigerator uses to keep the internal temperature cold. If they become dirty, they won’t work efficiently and your refrigerator may stop cooling altogether.

As a general tip, keeping your refrigerator full uses less energy than trying to cool when it’s empty. Therefore, keep as many items in your refrigerator as possible to help reduce energy costs.

11. Drafty Windows

Drafty windows are a major culprit of high energy bills in the summer and winter months. Periodically check the condition of the caulk line that holds your windows in place. If the caulk appears to be dry, cracked, or otherwise weathered, remove the old caulk with a box cutter or other sharp knife and run a new bead of caulk along the seam.

For added utility bill savings, you can further insulate your window by applying an insulating window film over the glass. These methods cost much less than the price of replacing your windows and implementing green energy technologies in your home.

12. Gutters

While gutters may go practically unnoticed when you look at your house, they are the main line of defense between your foundation and siding and the elements. Gutters are designed to capture water and debris runoff from your roof and divert it away from your foundation, and one of the main causes of water accumulation in basements is a lack of gutter maintenance and proper water diversion.

Clean your gutters at least once per year by physically removing debris from the channels and rinsing them thoroughly by using a garden hose. Avoid installing gutter guards – not only do these not adequately prevent debris from entering your gutters, they also make it extremely difficult (if not impossible) to properly clean your gutter system.

Also, be sure to regularly check that your gutters are properly affixed to your fascia boards, and replace any sections that appear to be damaged or leaking.

13. Roof

Periodically check your roof for damage. Damaged, discolored, or gravel-less shingles should be quickly replaced to prevent the need to replace your roof, water-damaged trusses, or drywall when you finally discover a leak. During the inspection of your roof, pay special attention to shingles that surround skylights, vents, and chimneys, as these areas are the most leak-prone.

Final Word

Keeping your home properly maintained will not only save you money by increasing the longevity of your appliances and existing structures, but it will also help you become more energy-efficient and save money on your utility bills. These tips merely scratch the surface of the things you can do around your home to keep everything running in tiptop shape.
May 2, 2018
Moving Up Is More Affordable

If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed.

Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:

“Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price.

Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016.

Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.”

Here is a graph showing the Affordability Index compared to the 40-year average:

The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade.

(Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.)

There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn’t wait.

Bottom Line

If you have held off on moving up to your family’s dream home because you were hoping to time the market, that time has come.

March 20, 2018
Gap Between Homeowners and Appraisers

January 25, 2018
The Impact of Tight Inventory on the Housing Market

January 9, 2018
There’s More To A Bubble Than Rising Home Prices

December 28, 2017
Buyers Market or Sellers Market

November 9, 2017
Are We Facing A Housing Bubble?

November 9, 2017
Moving Up To A Luxury Home ?

October 23, 2017
You Don’t Need 20% Down

October 9, 2017
The Truth About Homeowner Equity

October 5, 2017
Americans Still Believe Real Estate Is Best Long-Term Investment

September 23, 2017
Your Home Is An Oasis In The Inventory Desert

Homebuyers are flocking to the Triangle market by the thousands to find their dream homes. Unfortunately for many, the inventory of starter and trade-up homes in the the Triangle has struggled to keep up with demand!

According to the National Association of Realtors (NAR), the inventory of homes for sale dropped 7.1% year-over-year to a 4.3-month supply. That’s down for the 25th consecutive month.

Some homeowners may be hesitant to list their homes for sale. They are worried that it will difficult finding a home to buy and move in to. This is a legitimate concern; no one wants to sell their home quickly and not have anywhere to live.

But there is good news! If you are thinking of moving up to a luxury or premium home, there is more inventory available in these markets. You may even get a great deal on a home that has been on the market for a while.

If you are looking to move into a trade-up home, or if you are just looking to relocate to a new area in a home of the same size, there is still hope!

In many markets, homeowners are building contingency plans into their contracts. This means that the homeowner builds in extra time before they close in order to find their dream home. Sellers are upfront about the contingency with any buyers who come to see the house.

Your home is an oasis to buyers who are searching for homes in today’s market. The right buyers will sympathize and wait for you and your family to find your next home.

Bottom Line

Don’t let the fear of not finding a home to move in to stop you from moving on with your life. Let’s get together to discuss ways to set expectations with potential buyers from the start.

September 11, 2017
Planning To Sell Your Home

November 2, 2016
Job growth study: Raleigh No. 2 in technology

Research Triangle Park, N.C. — A new study finds that the Raleigh metro area ranks just behind Austin in technology job growth over the past decade. But North Carolina’s capital area is No. 1 in job growth related to STEM (science, technology, engineering and math) skills. The news comes as GSK donated $1M to kick start a N.C. STEM initiative on Wednesday.

The study, which was published by Forbes, is based on a review of various economic data for each of the largest 52 metropolitan areas across the U.S. from 2004-2014.

Technology-related job growth in Raleigh grew 62.3 percent to 38,853, according to data compiled by Praxis Strategy Group.

STEM-related jobs grew at 39 percent to 49,593.

GSK hopes to give STEM jobs a boost in the state with its $1 million donation to a “STEMAccelerator” program being launched by North Carolina New Schools. Gov. Pat McCrory was on hand for the announcement.

The initiative comes just over a year after a report projected nearly 240,000 STEM jobs would become available in the state but North Carolina was not producing enough students to fill the positions.

“High quality STEM education is critical to North Carolina’s future prosperity,” McrCrory said of the initiative. “To address the gap in education and workforce needs, we must provide resources and support for teachers’ professional growth – especially in the critical areas of science and mathematics. The STEMAccelerator will help us meet one of my administration’s goals of transforming the teaching profession into a rewarding, long-term career.”

The STEMAccelerator will launch in three phases, according to the New Schools organization:

Phase 1 – “Research and development: NC New Schools will bring together educators, higher education and industry partners to design new instructional programs focused on the emerging needs of the STEM economy. Co-development will ensure alignment between education and the workplace.
Phase 2 – “Pilot: Newly developed programming will be piloted with a core group of educators to validate and refine the content and delivery methodology. Specific emphasis will be placed on developing a virtual delivery component to support rapid, low-cost scaling.
Phase 3 – “Roll-out: Refined final programs will be scaled across North Carolina to deliver next generation learning for all students.”

Breaking down the study

Austin – Raleigh’s rival in many areas of technology job recruitment – led the way in tech job growth at 73.9 percent to 53,118 jobs. STEM jobs grew at a 36.4 percent rate to 86,189 over the decade. That was good for No. 2 behind Raleigh.

Both cities topped overall growth rate of San Jose in Silicon Valley where tech jobs grew at 70.2 percent to 153,546 but STEM job growth lagged at 25.8 percent and 168,652 jobs.

Forbes did, however, cite a caveat for the Raleigh area STEM growth: “[T]he fastest growth in the nation, albeit from a smaller base than many of the other biggest metro areas.

Nationally, Raleigh and Austin both exceeded the overall average of STEM job growth at 11.4 percent and tech jobs at 31 percent.

Job growth in other fields lagged considerably at 4.5 percent, Forbes reported.

The rankings

The top 10 cities:

1. Austin

2. Raleigh

3. San Jose

4. Houston

5. San Francisco

6. Salt Lake

7. Seattle

8. Nashville

9. Jacksonville, Fla.

10. Memphis

Interesting points in study

Forbes points out that all tech jobs are not at high-tech focused firms such as Raleigh-based Red Hat and Cary-based SAS.

As an example: “Just 7% of the nation’s 1.5 million software developers and programmers work at software firms — the vast majority are employed in industries as disparate as manufacturing, finance, and business services.”

The methodology

Forbes spelled out how the study was conducted:

“To determine the metro areas that are generating the most tech jobs, Mark Schill of Praxis Strategy Group examined employment data in two different categories. Half our ranking is based on changes in employment at companies in high-technology industries, such as software and engineering. (This includes all workers at these companies, some of whom, like janitors or receptionists, do not perform tech functions). Half is based on changes in the number of workers classified as being in STEM occupations, which captures tech workers who are employed in all industries, including those not primarily associated with technology, such as finance or business services. We ranked the 52 largest U.S. metropolitan statistical areas by the growth in tech and STEM employment from 2004 to 2014, as well as for their more near-term growth from 2012 to 2014 to give credit for current momentum.”

April 25, 2015
Consumer Optimism Gains Momentum

February 18, 2015
Raleigh Housing Update

January 24, 2015
Investors Benefitting From Rental Shortage

Corporate landlords are benefiting from the worst rental-housing shortage in more than a decade as construction trails demand and more Americans opt to lease rather than buy.

There’s an undersupply of single-family houses and apartments to rent for the first time since 2001, according to an analysis by Frank Nothaft, chief economist at mortgage buyer Freddie Mac, based on available inventory and historic vacancy rates. The deficit in the third quarter was about 350,000, the most in records dating back 14 years.

The shortage is giving the upper hand to institutional investors who spent more than $25 billion since 2012 buying single-family homes to rent. While the market for apartments has been in favor of landlords for five years, owners of houses are now able to increase rents and reduce turnover to boost profits.

“It’s that supply-demand equation that allows us to get aggressive about raising rents,” Stephen Schmitz, chief executive officer of American Residential Properties Inc., a landlord with more than 8,500 homes, said at an investor conference this month. “Three years ago, you would go to raise somebody’s rent and they could say, ‘I’ll go down the street and pay $100 less than I’m paying you now.’ But today they can’t because all those houses down the street are occupied.”

The U.S. rental-vacancy rate fell to 7.4% in the third quarter, according to Census Bureau data. The market is considered balanced, with neither landlords nor tenants having the upper hand when it comes to rents, at a vacancy rate of 8.2%, based on the average from 1994 through 2003, according to Freddie Mac’s Nothaft.

The housing surplus peaked at almost 2 million units, including 1.2 million rentals, in the third quarter of 2009, when foreclosures were soaring and years of speculative construction led to a glut of empty houses.

“The surplus of vacant housing has shrunk over the last few years because there has been household growth and limited new construction,” Nothaft said in a telephone interview. “In most markets and in the national data, what we’ve observed is that rents have been rising faster than inflation.”

Rents on all single-family homes and multifamily units are expected to climb 3.5% next year, compared with a 2.5% increase for home purchase prices, according to estimates this month by Zillow Inc. Chief Economist Stan Humphries. The U.S. inflation rate was 1.3% in November, with a goal of 2% set by the Federal Reserve.

Wall Street-backed landlords already are enjoying higher rents for single-family homes in markets hit hardest by the housing crash, where they first started buying in bulk.

The average monthly rent for a three-bedroom home in Phoenix surged more than 9% this year to $1,158, data from Westminster, Colo.-based RentRange LLC show. Houses now lease about 10 days faster than apartments, according to a report from the Center for Real Estate Theory and Practice at Arizona State University.

In Las Vegas, rents on houses rose more than 3% to a median of $1,248 in the 12 months through November, according to RentRange. In Orlando, Fla., they climbed 5% the same month to $1,294.

A reviving job market is driving household formation and fueling demand for homes faster than builders are delivering them. In the Orlando area, for example, 56,000 jobs were added in the 12 months through October, benefiting landlords such as Aaron Edelheit, chief executive officer of Atlanta-based American Home, a rental company with 2,500 houses, including about 200 in central Florida.

“They’re not producing many entry-level homes,” he said in a telephone interview. “That’s what creates housing shortages, and it’s going to drive up the price of rents.”

Raising rents is likely to become a higher priority for institutional single-family landlords next year as they get a better grip on operations and how higher rates affect their pace of leasing, said Anthony Paolone, an analyst with JPMorgan Chase & Co. who follows real estate investment trusts including American Homes 4 Rent and Silver Bay Realty Trust Corp.

Investors have positioned themselves to house some of the former owners of 5 million homes lost to foreclosure since the real estate crash, according to research company CoreLogic Inc. Many of those former owners prefer houses over apartments because they want more space for their children and pets. Landlords also are getting a boost from some of the 75 million millennials — 18-to-34-year-olds — who are starting out as renters rather than buyers.

The typical family renting a house from American Homes 4 Rent, an Agoura Hills, California-based REIT with more than 30,000 single-family homes, is in their mid-thirties with an annual income of $80,400, enough to afford to buy if they wanted to, according to CEO David Singelyn.

“Many of these kids saw their parents lose their home, and they’re a little bit disillusioned,” Singelyn said at the Information Management Network Single Family Rental Investment Forum in Scottsdale, Ariz., earlier this month. “How long will that last? I don’t know. But today there’s a significant movement to becoming a renter nation as opposed to an owner nation.”

Those tenants often pay a premium to rent from new firms like American Homes 4 Rent, which mostly owns houses less than 12 years old near good schools and provides better service than mom-and-pop landlords, Singelyn said. They also move less often, with 68% of tenants opting to stay in the most recent quarter when their lease came up for renewal, compared with less than 50% for apartments, he said.

Blackstone Group LP’s Invitation Homes, the largest single-family landlord, with more than 46,000 properties, as of Sept. 30 raised rents an average of 1.8% to $1,474 from a year earlier on 3,200 homes that were financed through the industry’s first mortgage-backed security deal, according to Kroll Bond Rating Agency.

“We’ve seen strong demand for our homes in all 14 markets we operate,” said Denise Dunckel, a spokeswoman for Dallas-based Invitation Homes. “That’s just an indication that there’s a large market that likes the flexibility that renting provides.”

American Homes 4 Rent raised rents 3% on renewals and 4% for new tenants in the third quarter, Singelyn said during a Nov. 3 conference call. American Residential Properties increased rents an average of 3.4% from a year earlier on renewals, while Silver Bay’s rents rose 3% on renewals.

December 23, 2014
Doctor Loan Program
This doctor loan program is designed to meet your unique financing needs. Home buyers who are medical professionals that are licensed, practicing doctors, including dentist and other eligible medical professionals may be eligible for this special program. This home loan program option offers significant advantages, including:
As a professonal Realtor, I’m dedicated to giving you expert advise and guidance that will lead to a sucessful home purchase. To find out if this loan program is a good fit for your situation, please contact me for a detailed consultation.
October 30, 2014