The New Shift In Housing Trends

My Buyer's Agent has had 5 clients in the past 2 months that she placed in lease properties. Normally, we might lease 3-5 properties a year. People just can't qualify to buy with the stricter lending criteria and the fewer loan products out there to accommodate the borrower with credit challenges.

Economic Focus Volume 11, Issue 29, For the week of August 13, 2007 wrote this insightftful article:

The rush to home ownership over the past decade has created a natural rise in rental vacancy rates. Exotic mortgage products created a wave of homebuyers who would not otherwise have qualified. This rapid shift in population significantly impacted the rental market leaving behind higher than usual vacancies.

As the housing market cools there is an increasing household shift back to rentals, creating a growing inventory of new and existing homes on the market. The residential rental market is a natural destination for these displaced households, so there is little surprise that rental vacancies improved over this past month.

This movement of households is further supported by the fall in homeownership which reached 66.2% in the second quarter, its lowest level since the 2nd Quarter of 2003.

First was the shift from rentals to housing, fueled by creative and exotic financing. Then a shift back to rentals, fueled by a tightening in credit and underwriting standards.

Just as a great rush to homeownership weakened the rental housing market while driving appreciation in home prices; we now see the flight from homeownership depressing the housing market and starting to create a premium on rental housing.

The creation of new qualified households has not been able to fill the vacuum created by the shift in housing. Additionally, a trend toward extended family units and young family members staying in the nest contributed to a 1st Quarter 2007 record high of a 2.8% vacancy in existing homes.

This movement in the market is creating exceptional opportunities for those who anticipate it and are brave enough to act. You know the old adage: buy low and sell high. This time around the signals are easier to read. There is ample opportunity for those willing to take the risk.

I'd like your feedback. Would you like to see a list of available local leases posted on this blog? Let me hear from you.