We all know real estate prices are continuing to fall and that foreclosures and short sales are on the rise. But what does this mean for the rental industry? Most would-be buyers are convinced the market has not yet bottomed out; in the meantime they will choose to rent. The thousands of home owners who have lost their homes due to foreclosure or short sale will rent. And a select few have found that an alternative to losing their 3200 square foot home to the bank is to rent it out. They then opt to rent a 1300 sq ft home to live in, saving up to $800 a month. For the present, renting also remains a better alternative to buying as underwriters tighten their restrictions, and interest rates slowly rise. The demand for rentals is increasing, but what about the supply? Surprisingly, new home construction continues, thus a significant amount of surplus homes for sale are beginning to transition into rentals. This trend may actually create a surplus of rentals in 2008. Today’s balance in supply and demand has created an active and healthy rental market. As the holidays approach and the school year begins, expect the average number of days-on-market to increase and the demand to rent or buy a new home to decrease. In every market at any given time there is always opportunity for today’s investor.
For an investor looking to buy an income property, the real estate market is great and looking to get even better. For those investors ages 55 and greater, the Sun City community homes are a great investment opportunity. Expect to find sound tenants with excellent credit and rental histories and as the baby boomers continue to retire this market will continue to improve.
Putting opinion and preference aside, let’s look at the facts: According to InfoTracker’s third quarter rental survey, in comparison to second quarter numbers, rents have increased in Rocklin’s 95677 by +8.5% and decreased -5% in 95765. West Roseville rents on average have increased +4.8% in 95678 and +5.5% in 95747 compared to a -7% decline in East Roseville’s 95661. According to an article published on Forbes.com in July 2007 entitled “The Fastest-Growing Suburbs in America,” the city of Lincoln ranks as number one with an +8.3% increase in rents and a 236% increase in population from 2000 to 2006. Although rents are increasing in key sub markets and home values are continuing to depreciate it will still be more than a few years before we see single family income properties in this area pencil out as they once did in 1999.
In today’s dynamic real estate market, the rental market is a very popular alternative to owning. If the current trends continue and interest rates remain reasonable, count on new investment opportunities to appear in these growing sub markets. Although we can all speculate on the future of tomorrow’s real estate market, the numbers provide information on the direction of today’s market. Utilizing this information, investors will make their move and the mass of speculators in turn will follow. With the holiday season and school year approaching, look to a professional to rent up and manage your property so you can capitalize on the highest rate of return on your investment.
By Robert A. Ortiz, President/CEO
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
