|
Homeownership Rate |
|||
|
|
Q2-2004 |
Q2-2009 |
Change |
|
United States |
69.2% |
67.4% |
-1.8% |
|
Northeast |
65.4% |
64.3% |
-1.1% |
|
Midwest |
74.2% |
70.5% |
-3.7% |
|
South |
70.9% |
70.0% |
-0.9% |
|
West |
64.5% |
62.5% |
-2.0% |
|
Data Source: U.S. Census Bureau |
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Nationwide, home ownership peaked Q2 of 2005 at 69.2%. Over the past five years, ownership has slid back to 67.4%, for a net loss of 1.8%. This is a zero-sum game; the flip side of this coin is that a decrease in home ownership translates to an increase in single family residential rentals.
According to a recent article by the Huffington Post, “2.5 million homes have been converted into rentals,” since 2007 and about 3.2 million since 2005. These conversions account for approximately 85% of all “new” rental property. One of the three primary reasons is that many “buyers of foreclosed [and short sale] properties are renting out the homes.” This is in contrast to more prominent fix and flip approach of the rising market.
I’m sorry, what was that? “Buyers of foreclosed properties are renting out the homes.”
Of course, every investor who’s been paying attention to the market is well aware that there are areas of the country where cashflow is virtually unheard of – traditional appreciation plays – that now work on both fronts.
It is the classic, buy low (in fact well below true value because the pendulum has swung too far), hold on to the property for positive cash flow until the market recovers, and then take great appreciation profits in the future. Of course, there is something else that the first-time homebuyer ought to be considering as well. If it makes good financial sense for an investor to own the property and rent it out (e.g., positive cash flow - see the cashflow search engine), then doesn't it make even better sense to be an owner occupant?
