- Joined
- Sep 14, 2007
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- 617
Another blog post from my blog
Over the past year we have definitely seen the person who would normally rent move to home ownership. With cheap mortgage rates, low down payment requirements and a flood of inventory on the market it was a great time to buy your first home or investment property for that matter.
At HGREI we have always targeted tenants that will move into home ownership. They tend to be mature, financially stable and sometimes they love our property so much that they buy it from us. It is truly a great tenant profile to have. This year we saw a lot of our tenants move to home ownership. It caused us a lot of turn over but it was also great to see those people moving into their first home.
I believe however that in 2010 we will see the Return Of The Renter! There are many signals that lead me to think that in 2010 and beyond the things that made it great to get your first home will no longer be true.
Interest rates are undoubtedly on their way up and this will make home ownership a more costly endeavor. The real question is how much are they going to go up and I believe the answer to that is by what ever it takes to hold inflation in check at 2%. So with a relatively week economy we won`t see it take off but as the economy strengthens we will see it return back to a normal 5% within the next 5 years. This is what makes real estate a great asset to hold as it is inflation adjusted and personally I can`t wait for "normal" interest rates and the return of healthy inflation.
The Finance Minister Jim Flaherty has stated that if housing prices start to rise too much he will implement more guide lines for mortgage funding. In other words, the minimum down payments are going to rise and amortization rates will be lowered. Both of these things will make it more difficult for the first time home buyer to get into the market. This will cause an increase of pressure on the rental market. So once again, I say, "Bring it on Jim!"
Lower inventory levels are already pushing house prices back up. We had a glut a year ago but that has all since but vanished and most markets are back into Seller controlled territory. With commercial lending loosening but still tighter than we are used to we won`t see strong numbers return to development for another year. This will again push prices of resale homes up and with it rents.
Go West Young Man! The resource heavy West will see the largest percentage increases in population as the demand for resources increase. If you want a little bit of interesting reading look up Jeff Rubin and his new book on Oil. Like it or not, the demand for oil isn`t going anywhere anytime soon and peak oil is a reality. Back to the effect this will have on the renter and the housing market....it is simple really....more people with less product available has to push rents and housing prices up.
I have outlined for you four factors: Rising Interest Rates, New Government Policy, Inventory Reductions, and Population Increases. All of these factors will have a positive effect for those already in the market and will make it increasingly difficult for those trying to get their first home thus THE RETURN OF THE RENTER!
Over the past year we have definitely seen the person who would normally rent move to home ownership. With cheap mortgage rates, low down payment requirements and a flood of inventory on the market it was a great time to buy your first home or investment property for that matter.
At HGREI we have always targeted tenants that will move into home ownership. They tend to be mature, financially stable and sometimes they love our property so much that they buy it from us. It is truly a great tenant profile to have. This year we saw a lot of our tenants move to home ownership. It caused us a lot of turn over but it was also great to see those people moving into their first home.
I believe however that in 2010 we will see the Return Of The Renter! There are many signals that lead me to think that in 2010 and beyond the things that made it great to get your first home will no longer be true.
Interest rates are undoubtedly on their way up and this will make home ownership a more costly endeavor. The real question is how much are they going to go up and I believe the answer to that is by what ever it takes to hold inflation in check at 2%. So with a relatively week economy we won`t see it take off but as the economy strengthens we will see it return back to a normal 5% within the next 5 years. This is what makes real estate a great asset to hold as it is inflation adjusted and personally I can`t wait for "normal" interest rates and the return of healthy inflation.
The Finance Minister Jim Flaherty has stated that if housing prices start to rise too much he will implement more guide lines for mortgage funding. In other words, the minimum down payments are going to rise and amortization rates will be lowered. Both of these things will make it more difficult for the first time home buyer to get into the market. This will cause an increase of pressure on the rental market. So once again, I say, "Bring it on Jim!"
Lower inventory levels are already pushing house prices back up. We had a glut a year ago but that has all since but vanished and most markets are back into Seller controlled territory. With commercial lending loosening but still tighter than we are used to we won`t see strong numbers return to development for another year. This will again push prices of resale homes up and with it rents.
Go West Young Man! The resource heavy West will see the largest percentage increases in population as the demand for resources increase. If you want a little bit of interesting reading look up Jeff Rubin and his new book on Oil. Like it or not, the demand for oil isn`t going anywhere anytime soon and peak oil is a reality. Back to the effect this will have on the renter and the housing market....it is simple really....more people with less product available has to push rents and housing prices up.
I have outlined for you four factors: Rising Interest Rates, New Government Policy, Inventory Reductions, and Population Increases. All of these factors will have a positive effect for those already in the market and will make it increasingly difficult for those trying to get their first home thus THE RETURN OF THE RENTER!
