As the rates rise and fluctuate in this current market, cautious consumers are looking for rentals to bide the time to see where the rates may go in the upcoming months and possible years. You have to consider, as an investor, you are tied to the information of the market and pivot your investment practices to continue to make your return. The consumer market does not keep their finger on the investment and financial market as you do, so you are seeing some reluctancy with the current interest rate but it goes deeper than that.
About 65% of the nations mortgages are below 4% and just over 80% of them are below 5%. You can effectively take those properties off the market for years to come. So, as interest rates rise, supply still is low. With supply being low, you are seeing less new listings which is going to keep the value of real estate high. The consumer is expecting a decrease in value in properties but we just don't see that happening. So what do you do when you can't buy a house, you rent it out until you can.
SFH rentals rose 13.8% year-over-year and the average lease price went up 3.5% to $2,112. There were 2,942 new leases signed in November of 2022 where only 2,585 were signed in November of 2021. As an investor, you really need to start paying attention to the rental market if you have not already been. The average DOM on a new rental holds at 32 days currently.
The rate is only one problem with the consumer market trying to buy a home. Lack of affordable housing is a huge driver in this market. You have to consider as an investor that the same amount of new construction permits have been issued every year since the 1960s. Population continues to rise and the construction of affordable inventory is literally nonexistent. As an investor, you offer opportunity to this market to afford a clean, comfortable home to a family that has been pushed out of the market. This is the time to really start pivoting to holding these assets. Remember, those who can make a product for a populous needing that product will stay in business and thrive. This is where you need to be looking in 2023.
If you are looking to increase you portfolio or you need help getting into this market, contact us so we can look through your business plan, wants, needs, and ideas to see how we can make it happen for you in 2023.
