Posts Tagged ‘rent’

Real Estate: A Renter’s Market?

October 18, 2014

buy house

(Image Credit: Google Images – flickr.com)

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RECENTLY OUR INVOLVEMENT IN REAL ESTATE MARKET DISCUSSIONS again witnessed the same persistent and lingering observation: Despite depressed prices, we hear a home sale in our area can be as rare as inheriting a rich uncle’s estate, which tends to contradict stories of a dwindling supply of houses to sell. Of course, sales may differ in various areas but sporadic and few sales appears to be the case in many locales, more or less.

While there are several efforts to identify the cause of slack sales, the one most curious to us is the sentiment that too many folks who otherwise would be likely potential purchasers now only seem interested in renting. Rent rather than buy? Why? Traditional thought usually gives home ownership a thumbs-up in terms of being a cornerstone for long-term financial benefit. Indeed,  many other positive aspects come with home ownership as well … for the homeowner and the community

So despite logic implying lower home prices should be spurring house purchases, not apartment rentals, for people who are looking for a home and can afford to buy. But this does not seem to be the case. Certainly negative local factors such as high property taxes, poor quality of schools, distant shopping and medical facilities all play a role.  Yet the apparent pervasiveness of the issue suggests one or more generalized causes for this circumstance, like the one we hear most frequently repeated: Lenders have become more demanding ― some may argue far more demanding ― in scrutinizing loan applications, resulting in too few approvals. In other words, loan application reviews are the polar opposite of those conducted less than ten years ago when mortgage qualification was far too easy.

To be sure, we’ve heard other theories and explanations too. Perhaps an uncertain economy produces would-be buyers who are overly cautious, which uncertainty and caution nudge them toward the transience and flexibility of renting. Or they may be extremely uncomfortable with the notion of committing to one of the biggest purchases of their lives until a nationally firm and reliable economic foothold is reestablished. Maybe they heard a horror story or two about rising costs for insurance, maintenance or property taxes. Could be they are too frightened to be tied to a mortgage and a property that could be difficult to sell in the current market, which inability to sell within a reasonable time is apt to prevent them from changing jobs or searching for one in another locale thereby reducing or eliminating their income. Then again, the lack luster economy might be pushing them to reevaluate all their financial priorities, spending habits and even lifestyle patterns, any of which just might point to a rental as a viable living arrangement that can be adjusted on relatively short notice as employment and/or other factors change.

Whatever actual perceptions or rationale exist in the market, we see housing moving with renters, not buyers. Although rentals certainly have a legitimate place in the housing arena, the need for the permanence of home ownership should not be taken lightly or shrugged off. Beyond financial considerations, home ownership has been shown to provide positive benefits for household members, a stakeholder interest in the neighborhood and a stabilizing factor to the overall community.

Consequently government and the private sector need to find cooperative methods to not only create and maintain sensible affordable housing opportunities, but also develop reasonable mortgage lending qualifications and review procedures.

 

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Need consulting, coaching or problem troubleshooting regarding this or other single-family or multi-family housing issues? We’ll be pleased to help you. Visit us at the Inhouse Corporation website or contact us at inhouseco@aol.com

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Blog Terms of Use and Disclaimer: The purpose of this blog is to promote awareness and general discussion of the presented topic. Use of this blog shall be the reader’s agreement this blog is not a substitute for the advice of a qualified professional and each action that may be taken shall be under the specific guidance and oversight and/or performance of a professional qualified in the subject matter. If you have a question or want assistance with a featured or related matter please contact us at InhouseCo@aol.com (include the blog article title on the subject line). Links, references and credits in this blog are for convenience only and are not endorsements by the author or Inhouse Corporation. Statements and/or opinions of guest authors may or may not reflect those of Inhouse Corporation.

When The Money Tree Wilts

April 13, 2014

Money Tree

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ALL OF US RUN INTO A CHALLENGING MONEY SITUATION AT ONE TIME or another. Its almost an inescapable part of modern life. As property managers we often become aware of renters/ residents struggling to meet expenses, particularly after some life-altering event, such as the loss of a job, a health problem or family emergency. These are unfortunate and regrettable circumstances over which few  have little, if any, control.

When such things occur most renters apparently are too stressed, emotional or embarrassed to talk about a reversal of their finances. This is fully understandable since one’s fiscal matters are generally viewed as personal and private. So most will try to slug it out on their own. In the meantime, if rent payments start to suffer and the resident is silent as to why, the property manager likely will conclude rent is deliberately being withheld and take the appropriate actions, which adds to the expense and stress levels. Moreover, as the manager watches rent payments arrive late, are partially paid or not paid at all, the time has passed for the resident to reorganize his/her finances and have a better chance at avoiding the fees that result, making the situation even worse.

Sure the rent still needs to be paid, but when a resident willingly discusses his/her economic difficulty with our property manager, and does so in a manner that allows the manager time to offer helpful suggestions,  we usually recommend one or more community organizations that can aid and/or work with him/her. Often the approach is to create and maintain a realistic household budget that can cover necessary expenses out of the resident’s remaining income. Sometimes we will teach household budgeting to residents where such training is unavailable through community groups. However, working with a community group usually is more beneficial to the resident in that it provides guidance while soothing the anxiety otherwise associated with speaking to management about the problem, and it may be a benefit to the property manager if it can appropriately side-step an eviction and resulting vacancy.

Of course, not all property managers will react the same way though we think most responsible managers are likely to view sufficient advance warning of a resident’s fiscal problem as an opportunity to assist that resident avoid the consequences of nonpayment. As professional property management, we do.

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Need coaching, training or problem troubleshooting regarding other housing issues? Visit us at the Inhouse Corporation website or contact us at inhouseco@aol.com

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Blog Terms of Use and Disclaimer: The purpose of this blog is to promote awareness and general discussion of the presented topic. Use of this blog shall be the reader’s agreement this blog is not a substitute for the advice of a qualified professional and each action that may be taken shall be under the specific guidance and oversight and/or performance of a professional qualified in the subject matter. If you have a question or want assistance with a featured or related matter please contact us at InhouseCo@aol.com (include the blog article title on the subject line). Links, references and credits in this blog are for convenience only and are not endorsements by the author or Inhouse Corporation. Statements and/or opinions of guest authors may or may not reflect those of Inhouse Corporation.