OfflineThere are articles all around the media that tell us rising student debt is crippling young Americans’ financial futures. There is no doubt that the numbers are staggering and still going up, and it’s definitely true that this keeps many young people out of the housing market. The “first time homebuyer” is becoming an endangered species.
We’re becoming a “nation of renters” according to many market watchers and economic experts. Home builders are betting on it, with multi-unit housing starts up a whopping 416% from the 2010 low. The U.S. population is still growing, and fewer people are buying homes. They’re not pitching tents, so renting is where the market is moving.
One article’s headline this week reads “Single-Family Rentals Are Here To Stay.” So, is the movement toward multi-family or toward single-family? Single family rental homes now comprise 35% or all rentals and 11% of all households. From 2005 through 2012, single family rental homes grew 1.7% per year.
While student debt is a factor for the younger generation, recently there is more information indicating that a bigger problem is income. Younger Americans are just not as affluent as they have been in the past. Their parents aren’t either in most cases, as the middle class in America seems to be shrinking. Even with low mortgage rates, the average buyer needs to leverage up a lot to get into a home, and there is a lot of fear about getting into that much debt for a home.
Let’s just keep on keeping on, as it seems rental property is going to be the growth opportunity in real estate for some years into the future. Economies do not turn on a dime, so it’s still a good time to invest in rental property, and it can build a nice retirement.
It Isn’t Just About Student Debt
Posted on: Wed, 06/04/2014 - 14:18
It Isn’t Just About Student Debt
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but this is sad to me. I hope the tide will turn, but it is nice to also have people renting our investment properties, but I hope we will always have both.
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jbischoff
I believe that the student debt has the younger generation being very cautious about getting into a home purchase. However the economy is also a contributing factor in home purchases. I have not been one to follow the news but even I know that when the economy takes a downfall the home purchases also takes a downfall. This results in more rentals. I have also noticed in past years, the rental prices start rising about 1-3 years after the economy goes through its downfall. This is due in part to the demand and in part due to the tax appraisals increasing. When this happens it will take about another couple of years and people will start looking to purchase homes again. So at this time it is in my opinion that the rentals will continue to rise which is good for the buy and hold investors. In another year or two more people will want to stop giving their money to someone else and the first time home buyers will grow. I hope that this time the first time homeowners will not get into homes that they truly can't afford.
This too I feel shall pass....
Although we will love investment buy and hold properties..... The sway of public opinion will change I believe student debt is initially holding back first time home buyers.... But the economy might change direction due to the fact we have an upcoming election in 2016 and I feel looking at their tax plans (potential presidential candidates) and where they generally want to direct the country will have a great affect. Obama promised change and I think the next presidential candidate will push reform in the sense of student debt and the country's debt approach..... Spending is slowly gaining speed again....
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Thanks for sharing your findings!
TC
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I agree with the article that we are becoming a nation of renters which is sad but unfortunately it is reality. I am pretty int in multi fam & like DG MOD said folks aren't pitching tents so they will have to have some place to live we may as well be the landlords & have good decent housing & at the same time help our families too.
I think the Govt is in for a humbling time & it is just part of the evolution of the Country. Thank God we have REI.
Tony
Go faster do more! GFDM!