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Southern Maryland Real Estate

By Tony McMahon | Agent in 20601
  • Renter Nation Rages On

    Posted Under: Market Conditions, Rent vs Buy, For Rent  |  July 30, 2012 4:30 PM  |  433 views  |  No comments

    By Diana Olick 

    The supply of empty homes for rent is falling, and the nation's homeownership rate is hovering near a fifteen year low.

    How can that be when the housing market is finally turning around and more homes are selling?

    The answer is simple: Investors.

    The nation's home ownership rate ticked up a statistically insignificant basis point, from 65.5 percent in the first quarter of this year to 65.6 percent in the second quarter, according to the U.S. Census Bureau. Q1 was the lowest home ownership rate since 1997 and is down from the peak of 69.4 percent in 2004.

    Given that home sales improved significantly during the first half of this year, you would think that home ownership rate should have surged higher, but the rate is calculated using only owner-occupied homes. If an investor buys one home or 100 homes, those homes are not even put into the calculation because they owner doesn't live in the homes. Realtors estimate around 20 percent of homes sales are currently to investors, but given bulk deals offered by the government and banks on foreclosed properties, that percentage is likely higher.

    "The very modest increase in the homeownership rate in Q2 does not persuade us to alter our view that the share of the population who own their home will fall further over the next couple of years," writes Paul Diggle of Capital Economics. "Meanwhile, supply conditions in the rental market are tightening, with a falling proportion of single and multi-family rental homes vacant."

    Rental vacancies in fact fell to their lowest rate since 2001. That is why so many investors are rushing in to buy distressed properties. The rental market his hot and getting hotter. Average asking rent rose 5 percent from a year ago, though they are down slightly from the previous quarter.

    Since the peak of home ownership in 2004, six and a half million additional U.S. households are renting, which Diggle calculates is equivalent to 90 percent of the increase in total household numbers over that time. He estimates home ownership will fall to 64 percent over the next two years.

    An investor-driven recovery in home sales is certainly positive and is helping to clear the huge backlog of distressed properties on the low end; investors are necessary now, but until real owner-occupants, including the all-important first-time home buyer, return, a robust recovery in all price tiers of the market will remain out of reach.

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  • Builder Takes Different Approach, Starts Renting

    Posted Under: Agent2Agent, For Rent, Rentals  |  April 4, 2011 10:07 AM  |  1,086 views  |  No comments

    Daily Real Estate News  

    After sluggish sales in the new-home market and a tight lending environment that is keeping many buyers out, one home builder is taking a new approach to improve its cash flow: Renting out recently built homes.

    Beazer Homes is adding a new division to its company that will buy — at steep discounts — recently built homes and then rent them out. The company will purchase homes built after 2004 that are primarily foreclosures or short sales.

    Beazer Homes will roll out its new division by starting to buy homes in Phoenix before moving to other areas across the country. It expects to have more than 100 homes in its pre-owned portfolio by the end of fiscal 2011, Reuters News reports.


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