Why Renting Is The Only Option For Most Of America
The decision to rent or buy a home isn’t a choice for most in America. The data suggests, even more, are likely to be pushed into renting soon, and for quite a while.
On a monthly payment basis, it may still be cheaper to buy a home than to rent an apartment in many areas of the US. It may make even more sense for those who will hold a property for at least a couple of years. Even in high priced zones. Though most just don’t have the option.
Why Americans Can’t Buy Homes
Down payments are the most obvious issue. Based on the national average, home buyers would need over $53,000 for a down payment. It would take most workers 20 plus years to save up that much.
Money and Fox Business break it down even further to show the average down payments required in different states here. The good news is that it may get as cheap as around $13,000 to put a down payment on a modest home in Alabama, Wisconsin or Michigan. It’s a lot more in Alaska, Utah, and Rhode Island.
Then compare that to what American households have saved. Half don’t even have $1,000 in emergency money. 80% have nothing for a down payment.
That’s aside from new regulations which are making the lowest down payment, low rate, and easier to qualify home loans harder to get.
Availability is another issue. Despite there being more than enough vacant homes for every homeless person in America to have several, there is still the problem of enough properly priced inventory. Don’t count all the grossly overpriced properties on the MLS and Zillow right now, because those needing a mortgage will find they won’t appraise for enough. For properties to be available to buy, people need to move and sell theirs. The latest numbers from ATTOM Data show a huge surge in underwater homes. Specifically among those who have serious negative equity, and owe at least 125% of their home value on a mortgage, or more. Nationally it’s around 10% of all properties again. Many cities and zips have more than 20% of properties underwater. In at least 32 zip codes, more than half of all homes are underwater. They can’t sell to move up or down and make room for the massive influx of Generation Z in the housing market. That will ultimately tip many into foreclosure, and back into the rental pool.
Renting is in, and Here to Stay
The bottom line is that renting is here to stay. We’re likely to see a faster-growing pool of renters ahead, and renters who need to rent for much longer. Serving them can be highly profitable, providing landlords get their pricing, processes, and customer experience right.
ABOUT THE AUTHOR
Bill Zahller is the Managing Partner of Park Capital Partners, LLC and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Partners, LLC in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalPartnersLLC.com for more information.