Rental Rates are on the Rise
With housing affordability the best it has ever been, but with tighter lending conditions, many buyers are renting instead of purchasing homes, causing demand for rentals to increase and rental rates to rise. Many investors are purchasing homes with cash to use properties as rental homes. According to Lawrence Yun, the chief economist for the National Association of Realtors, there is no reason to believe the rental growth will cool as more young adults need a place to live. The decline in construction of apartment complexes will also increase the demand. If annual rental rates continue to increase 3.5%, rents will double in the next 20 years. If they annual rental rate increases at 5%, rents will double in the next 14 years. Yun also predicts solid home price appreciateion over the long haul, which will be a double win for investors with monthly rental income and appreciation for the future.
Information courtesy of Lawrence Yun, the chief economist for the National Association of Realtors, Realtor Magazine
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