Optimism is in the air in 2017, but there are gaps in the property market which represent both challenges and opportunities to be taken on in the months ahead.
A look at several trends highlights ongoing, and even widening disparity, especially in the property market. Homelessness, home buying, and rental property application demands are all intertwined.
The latest homeless count in Detroit, MI highlights one of the greatest issues we face today. Coverage by the Detroit Free Press shows that homeless counts are far from what most would consider accurate. They don’t count those in abandoned buildings, or those who might raise enough to stay in a motel occasionally. They don’t count those who aren’t seen. Millions more individuals and families are out there in the cold right now, facing a hard and bleak climb back into housing, if they can find it.
There is a lot of interest in buying homes this year. Millennials are maturing to the point of wanting to invest in real estate and desiring to own their own homes. Millions who lost their homes in the previous crises are expected to now see their credit recovering, and may want to buy again. Rising rates may provide some urgency to act sooner than later. However, access to mortgages hasn’t eased enough yet. Bloomberg reports that double the number of pending transactions fell apart in 2016 compared to the year before. That is largely to do with loan issues. So, renters who want to become homeowners still face a significant gap between what they want, and can have in many cases.
Hardcore Rental Hoops
At the same time it isn’t easy to land a rental in many areas either. In fact, it may be far cheaper and easier to qualify for a home mortgage and buy a home than to rent. Kaya Wittenburg of Sky Five Properties in Miami says landlords have begun requesting double the security deposit recently. Realtor Rosa Houghten with Keller Williams in Naples says landlords and managers are really stretching the limits. Specifically, some are boosting application fees to over $500 dollars, on the cheapest rentals. At the same time move-in money demands are rising, screening processes are tough, and can take over 20 days, while many are paying almost nothing to agents for finding tenants. Some may wonder if some of these firms are making far more money by maintaining vacant units and simply collecting endless streams of application fees. Rents themselves aren’t cheap either. Even in destinations like Dallas, TX, Zillow reports that while home values remain low, rents are extremely high. In many cases rents are double what it would cost to finance a home with a 30 year purchase loan.
What we currently have is a landscape which makes it very hard for individuals and families to rent. Many are already homeless. Climbing back from homelessness has been made even more difficult by a new breed of landlords and property management firms, and high rents. Trump has promised to make it easier to get mortgages this year. If he accomplished this, then we could see a big surge in home buying activity. Some landlords need to pay attention, and ensure their practices will remain sustainable as this dynamic changes. There is currently great opportunity for ethical real estate investors to secure good property deals, and to lease sustainably. It’s a matter of seeing the big picture and retaining your heart for serving others, verses copying some of the more predatory processes out there today.
Whether you are looking to buy, sell, or finance a property in Michigan in 2017, your investor friendly title company, MIT, would love to help…