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“Not So Surprise Winners In Mortgage Meltdown…”
By Sherman Ragland | August 30, 2007
As to have been expected, rental rates for apartments are rising very quickly right now as massive numbers of “would be”, as well as newly “former” home owners are exiting the single family housing game.
The combination of a surge in demand (for rental housing) coupled with a lack of new supply (of apartments) is already starting to show up in the pricing of rental units. Specifically, apartments.
As an “Educated” Real Estate Investor – You Qualify for this title if you are reading this blog on a regular basis, you know that there are many options available to someone with bad credit, newly foreclosed or recently evicted, other than renting an apartment. Someone with a recent financial situation, such as a foreclosure, can make arrangements with a home owner to rent a house, do a lease to own, or even purchase a home with seller financing, rather than traditional bank and mortgage financing sources that look at credit reporting data.
However, for the masses (most of whom do not read this blog) their world is very “Black or White”. I own my own home -> I rent an apartment <- with Nothing In-between. As such, the first choice of those who either have been forced from their home due to a foreclosure, or have simply decided: “Now is not a good time to buy a house”, their primary decision is/will be to simply find a place to RENT.
Those of us who have been following the real estate market for more than 3-5 years also know that during the past 5-7 years there has been a tremendous push to get people into “Home Ownership” and a complete lack of focus on the part of either the Federal Government (which sets housing policy in the US) or lenders (Which take their lead from the Federal Government) to push large sums of capital into the construction of new apartments.
Therefore, we are now witnessing a huge spike in Demand for Rental Housing (Apartments) at the same time that the Supply of new units is well under what is needed. ANYTIME Demand Outpaces Supply, there is Typically only one result -> PRICES GO UP!
That is exactly what has already started to happen. Currently throughout the US OCCUPANCY of apartments is between 90% and 95% for most major metropolitan areas. With occupancy at almost all time highs, and now new major apartment projects in the pipeline, Apartment owners have a tremendous opportunity to increase the rental rates they charge, and many are starting to take full advantage as they see the numbers of new applications from recently foreclosed upon renters.
Given the long lead time for getting a new apartment project off the ground (3-5 years) look for those who own existing apartments, as well as those who can buy existing low quality buildings and turn them around, to have a period of uninterrupted hikes in their rents as they are able to “name their own price” to meet this continued surge in demand.
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Tags: apartments, bad credit, credit reporting, foreclosure, lease to own, real estate investor, rent a house, sherman ragland
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