Home loan availability is on the rise thanks to low interest rates and new initiatives from Fannie Mae and Freddie Mac that provide low-down-payment loans. Together, these factors should expand the number of people who are able to pursue mortgages and drive improved homeownership rates, but statistics show this isn’t happening. Instead, the Census Bureau found homeownership rates are in decline, and young people who would otherwise be first-time homebuyers are sticking with rental properties.
While the drop in homebuying is partially a result of economic necessity, it is also a manifestation of the nation’s shifting tastes. Many Americans, particularly young people, do not view homeownership as a necessary part of the American dream. Real estate investors can benefit from the cultural shift that has more people choosing single-family home rentals over traditional homebuying.
The allure of flexibility
Homeownership usually represents a move toward stability, but for those who experienced a shaky jobs climate after the financial crisis, homebuying appears restrictive. Renting makes it easy for people to quickly move in pursuit of a job or educational opportunity. In fact, the number of young people who cite flexibility as a key reason for renting is on the rise. In their most recent survey, Fannie Mae spoke with young people in 2012 and 2013. In the span of a year, the number of millennials who said they were renting to save money for a mortgage dropped from 35 percent to 26 percent.
This shift is not limited to young people. Flexibility is also an appealing trait for baby boomers with empty nests. According to the Joint Center for Housing Studies at Harvard University, this older population will swell the rental population by up to 2.4 million in the next decade. Now that their children are out of the house, many baby boomers will seek to downsize their living arrangements.
Rather than purchasing a smaller home outright, many boomers will choose to rent. These older individuals watched their homes lose value in the recent financial crisis. Now that home prices have rebounded a bit, many will want to cash out of their current homes and put their money in rental real estate, which will provide freedom if they want to move closer to family or into assisted living communities.
An easy way to invest
To capitalize on the cultural shift toward rentals, investors should register with HomeUnion® to begin building their diversified real estate investment portfolios. HomeUnion® uses a combination of deep data analytics and on-ground research to identify the best single-family rental properties in markets that will deliver the best return on investment. Investors also have access to financing through an in-house lender, and the company handles property maintenance as well as tenant management, giving investors access to the benefits of property investment without the commonly associated risks and hassles.. Expand your investment portfolio with HomeUnion® and enjoy the returns SFR investments can add to a portfolio.