Economists predicted that 2014 would be the year that normalcy returned to the housing market. Although rates would begin to inch higher, confidence would strengthen and people would see this as the end of our struggles; private home sales would start to increase. Things haven’t materialized exactly as experts predicted.
Although many parts of the United States have somewhat followed this pattern, some areas have experienced yet another dip in mortgage rates recently – single family homes just aren’t moving at the rate expected. Here are a few reasons why.
First, although business analysts said the rates had already hit bottom, some credit unions, banks and other lenders recently dropped their rates – attempting to encourage hesitant buyers to apply for mortgages.
Second, some homeowners are waiting it out – sheltering in place – hoping they will get a slightly higher return on investment if they wait for the inventory to fall even further.
Thirdly, although the jobs numbers look better on the surface, many people simply stop looking for jobs and dropped of the tracking radar.
Finally, credit is harder to qualify for today than it was just a few years ago. Potential borrowers also assume that their credit score and history aren’t “good enough” and don’t bother to apply, even if they think they could afford a home.
What this means for the rental market and what should you do?
While homeowners and potential buyers wait on the sidelines, anxiously watching the interest rates and inventory numbers, property managers and owners have a perfect opportunity to fine-tune their marketing and leasing strategies.
The 2012 New Jersey Apartment Industry Economic Impact Analysis and Sector Profile reveals some interesting details apartment projections.
- Demographics – race, ethnicity, age, socioeconomic status – play a key role in shaping the rental industry landscape. It may be necessary to invest more time and money wooing foreign-born renters.
- Life cycle expectations are changing. While homeownership has been the quintessential American Dream for most people since the end of WWII, lifestyle is often more important than owning your own home today.
- More people understand the true costs of home ownership and opt for a more “mobile lifestyle” that affords them the ability to relocate for jobs, school, and to be closer to children or parents.
Forward thinking property managers will continue to watch the housing market research as they review strategies and business plans. As the advantages of rental housing continue to emerge, your property must be ready to respond – with a new appreciation for potential tenants.
- Review your marketing strategies
- Upgrade administrative tools – accounting software, scheduling processes, training programs
- Compare similar properties in your community prices, amenities and availability
It is important for rental property owners and managers not to simply wait on the sidelines for the housing market to shape their future. Be proactive.
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