As more and more would-be home buyers choose not to purchase homes, they are going to need a place to live. It is either move in with mom and dad or find a place to rent. According to The Census Bureau’s Fourth Quarter 2010 survey of Residential Vacancies and Homeownership, the homeownership rate dropped to 66.5% (the lowest level since 1998). The West Region having the lowest level among regions with 61.0%. That same survey shows that the rental vacancy rates have dropped to 9.4% (lowest level since 2003). These trends indicate an increase in the demand for rentals, which provide opportunities for Arizona investment property. A recent article, “Homeownership Rate Hits 10 Year Low. Watch Out for Rent Inflation”, published on the Mortgage News Daily website talks about how this data may mean the inflation of rental rates.
Plain and Simple: The homeownership rate fell to 66.5% in the fourth quarter of 2010. This is a 10 year low. In a reallocation of sorts, the rental vacancy rate declined as housing consumers are choosing to rent instead of own. This is arising for one of two reason, the pool of qualified borrowers has shrunk considerably as lending standards have tightend…or people are choosing to wait it out a bit longer to see if home prices to indeed double dip. This makes sense as excess inventories are seen hampering the home price recovery process, especially in the hardest hit regions. The homeowner vacancy rate, which measures the number of unoccupied homes on the market (available for sale) was basically unchanged at 2.7% in Q4 2010. This likely reflects a reduction in home evictions thanks to the foreclosure moratoriums that were enacted as a result of the robosigning scandal. However we could also look at the number of homes being held of the market as another gauge of shadow inventory. That metric has risen from 6.77 million in Q4 2009 to 7.23 million in Q4 2010.
Rental units are clearly in demand. Watch out for rent inflation!
How are you going to position yourself to take advantage of this opportunity? Learn more about how Clear Vision Investment Group can assist in setting your sail in front of this trend by purchasing Arizona investment property.
