Home prices nationwide increased over 5% in November, according to the S&P/Case Shiller U.S. National Home Price Index, which tracks home prices in 20 US metro areas. Since the nadir of the market in March 2012, home prices have increased nearly 35%, although national prices are still below the peak levels seen in late 2007. In fact, November marks the 12th consecutive quarter of home price appreciation. Furthermore, home inventories are well below the norm; as of December, the supply of existing homes represented a 3.9 month supply, well below the 6 months that economists believe indicates a healthy market. All signs indicate that we are in a “sellers’ market” for residential real estate.
All this bodes well for owners of residential rental properties. Surging home values deter many families from becoming homeowners; and home affordability is predicted to get worse in 2016, forcing more into the rental market. Many younger people, facing significant debt and flat wages, simply cannot stretch to buy a house. These trends, coupled with a long term trend of increasing household formation, indicate a large influx of would-be homeowners into the rental housing market. In particular, those households with families or otherwise needing more space and outdoor access, will be attracted to the single family rental market.
There is other good news for SFR landlords. The mortgage market for SFR real estate has recently emerged, like a phoenix from the ashes of the housing crisis. Never before has there been a predictable, efficient and affordable way to finance non-owner occupied properties. Significant investments by private equity, Wall Street and even the government-sponsored housing giants, Fannie Mae and Freddie Mac, have moved the SFR market into the mainstream. Owners of rental properties, backed by strong renter demand and appreciated property values, can unlock significant value and cash proceeds from their real estate holdings.
It is an excellent time for owners of single family rental properties to position their investments for years of stable, predictable income. Demand for rental housing continues to grow, and tenants in houses tend to have much longer occupancies than those in traditional multifamily properties. And the availability of long term fixed-rate mortgages has never been better. Simply call your mortgage broker or search “rental property finance” on the web, and find a lender that can finance one, five or 100 properties all at once. Investors are anxious to partner with owners and participate in the burgeoning rental housing market.
Contact Colony American Finance for real estate investment financing options for your real estate investment needs. We provide attractive long-term debt products for stabilized rental portfolios as well as credit lines for new acquisitions. For more information about how Colony American Finance can help grow your rental and rehab business, please call 844-223-2231.