Recently there has been much written regarding the home sales market.
As you know home sales are suffering from a lack of inventory, bidding wars, and increased prices.
Pricing however will most likely continue to rise due to supply and demand.
Waiting for home prices to go down is not expected to be a good Idea at this time! It is increasingly more likely that rates will go up and less likely that prices will go down. With rates where they are now higher priced homes cost less then before. For example one client moved from middle Virginia Beach to a home one block from the beach. This client spent approximately $100,000.00 more for the beach house. However the mortgage payment was lower due to the interest rate. Negative Media is discouraging younger buyers from investing in their future.
It seems that there is another market mover going on.
It is the gradual movement of potential homeowners deciding not to buy, but to find other options, some are looking for short term. while others are looking for long term non owned alternatives. This has led to a hot market for investors to buy up properties, sometimes whole neighborhoods. They renovate the dwellings, and place them in the leasing market.
According to a recent article in the Wall Street Journal, millennials feel they are getting the best of both worlds.
as they can get a single-family home in a good neighborhood, without the responsibilities of owing a home. Some developers/investors, are even providing on site property management and amenities. Is this new scenario causing a change in direction in the American dream of owning a home? I don’t think that younger generations are realizing a few key facts:
- Allowing institutional investors to control, and monopolize the housing market can cause long term consequences. Do we really want more than half of the market controlled by big investors, or Wall Street?
- This Leasing trend is also stifling the younger buyers from the ability to build equity in a home, which creates retirement stability. While at the same time denying the community of stable residents, and loss of input into a say in local government and politics. This also negativity impacts what our kids will be taught in our schools.
- Remaining Transient can also cause neighborhood disruptions, including lack of upkeep of the home, which may affect property values. Homeowners have “skin in the game.” They tend to help keep the neighborhood properties clean and up to code.
- Home Ownership has always been one of the best ways to increase net worth. The equity built by owning a home contributes to the family retirement plan. This in turn provides financial security when the owner reaches retirement age.
- Although there are limits, owing a home provides a tax break via the ability to deduct the mortgage interest and property taxes. This results in a lower taxable income.
What is the bottom line?
It seems there is a place for this type of housing, however communities must consider all aspects of the impact of what a large percent of nonowners vs owners will cause in the community. We also must consider what impact, the “big government, Wall Street, and the media can cause on local government, politics, and local government services, such as police/fire, utilities, schools, as the average lease is for a period of 1 – 2 years.
Take control of your future and invest in a home before large investors push you out of the opportunity to own.