Housing Market Recovery–Split like Charles Dickens classic….

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Housing Market Recovery–Split like Charles Dickens classic….

tale of 2 cities book

Today’s WSJ published an article about the US Housing Market recovery diverging into two recoveries.  Reminds me of the Dickens classic a bit….

Essentially, lower priced inventories are vanishing fast while inventory on the higher end piles up.  While on the surface this might seem like “Economics 101” (and it does reflect some of that light) there is more to the story, especially as it relates to your rental portfolio positions and future purchases.

WSJ Housing Market Takes on Split Levels 030816.

Here’s some of the highlights from the article:

  • On the low end, after a slow recovery from the housing bust, first-time buyers are finally returning to the market, bolstered by still-cheap mortgages. But after years of little new construction, inventory is still tight.
  • High-end buyers, meanwhile, are more sensitive to the stock market’s struggles this year.

-Markets move. If you aren't carefully watching them, don't be mad when you hit an expensive wall.-

 

 

 

 

 

So…..how does this information impact your rental portfolio positions and plans?

  1. If You are looking to expand your portfolio:  Expect stiff competition from Owner Occupant Buyers.  You’ll likely be bidding higher than you ever thought possible and expected to make a Highest & Best Offer.  In other words, your cost basis will creep up to possibly uncomfortable levels.
  2. If You are looking to reduce your portfolio:  Expect strong demand from both Owner Occupant Buyers and other Investor Buyers.  It is a great time to “ring the cash register” if you’ve determined it’s time to sell a unit.
  3. Future Rental Rates: The article doesn’t dive into projecting future rental rates but it does hint at 1st Time Buyers moving out of the rental market into home ownership.  Time will tell on how this outflow of qualified tenants will impact the future rental rates.

 

 

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