Homeownership Falls to a Nearly 20 Year Low
How Dipping Homeownership Rates Could Benefit Your Real Estate Investment Business And a few things you should consider
Average US homeownership hit peak in 2004 at 69.2%, but has been falling steadily since the bubble implosion of 2008, and is now at its lowest level since 1995.
As reported by Marketwatch.com, Jed Kolko, chief economist at the real-estate website Trulia said, “Tight credit, tight for-sale inventory, the challenge of saving for a down payment, and more rental single-family supply all helped lower the homeownership rate.”
With homeownership rates continuing to be the highest in the Midwest at 70% and lowest in the west at 59%, it’s a good time for real estate investors to take note of regional differences. Looking at the various regions, the Midwest home ownership rate has fallen by 1% in the last year and remains fairly steady in the Northeast at 62.5% during the first quarter of 2013.
For those who favor rental property investments, this could be an optimal time to pay close attention to the fluctuations of individual markets, perhaps allowing some of those fluctuations to dictate their next move while gauging the benefits, as well as the challenges, to their real estate investment business
Another important factor to keep an eye on is age groups. Individuals 35 to 44 saw a nearly 1 ½ % drop in homeownership from 2012 to 2013. This drop is likely due to foreclosures according to Brad Hunter, chief economist for Metrostudy, who reportedly said to the Wall Street Journal, “the number has gone down for middle aged people because they’re the ones who lost their homes to foreclosure.”
The other age group that seems most affected is among the baby boomers age 55 to 65, falling approximately 1%. Given these statistics, real estate investors who are seeking rental property investments may want to consider such factors as accessibility for the nearly elderly (think stairs, or rather, lack of them!) and surrounding area hospitals, parks, and public transportation, in addition to due diligence considerations like schools, entertainment and other factors that normally come into play.
Finally, once consideration is given to where and why a rental property investment should be made, plenty of consideration should be given to how it will be managed. Rental properties, while a terrific investment opportunity that even comes with the all too often overlooked possibility of ancillary real estate investment income, do come with their own set of demanding responsibilities. Though these challenges can be plentiful, if handled with systems and strategies in place, this particular source of real estate investment cash flow income can be one of the most rewarding paths to move along toward long term financial stability and wealth building.