Rental Real Estate Market Update
Coronavirus! It is all everyone can talk about right now, and it is effecting almost everyone around the world as well. Is it going to be the end of business as we know it or are we going to be able to come back from this after a relatively modest back step? Looking at the overall U.S. Market, we are able to see that the average listing price for rentals has been steadily increasing through early May and rents appear to have gone up instead of down during this time. This is in direct opposition to what most people are seeing and hearing in their daily news. Our thought process on this is that we will start to see increases as markets open back up and the economy is set back on the right track, however, with a second spike pending we are not sure what the total long term outlook will be.
Is COVID 19 Displacing Rental Property Tenants?
In order to see if Tenants are moving around more than usual we would look at the apartment retention rates. In doing so, we can see that apartment retention rates are the highest in the 10 years trailing this, and we have not seen a downtick in this COVID 19 crisis to this point. This makes sense on a logical level being that most people will most likely want to stay in their home rather than trying to find a new home, and it could also be a symptom of the crisis meaning that Landlords are trying to help Tenants stay in place by offering payment plans, and other deferment options. This could also be compounded by the courts being closed and evictions being staid, meaning that if we see a downtick in retention over the next few months as the courts open and normal eviction processes begin then we will know that most of the tenants were being helped by Landlords to stay in their apartments.
Who Can Get A House or Investment Property In This Market?
With restrictions getting tighter and big banks requiring higher FICO scores, incomes, and more down payment it can be difficult for some people to get a mortgage, and the banks are definitely tightening up their restrictions, however, this does not mean that all banks will be tightening up their restrictions. For most people purchasing homes, it should not be a problem to meet the minimum requirements necessary for the non-large banks to take their mortgage liability, however, for investors looking to purchase properties, it could mean that they may be able to purchase less which can keep the market depressed a little longer than it could be.
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