They Have No Plan to Move
Over the past few years, housing experts have come up with two solutions to bolster inventory and slow home price growth — ramp up new residential construction and encourage a larger share of current homeowners to place their homes on the market.
But according to Bankrate’s latest analysis, housing experts are going to have to rethink the second part of their plan. Seventy-nine percent of homeowners told Bankrate they have no plan to move in the next five years. Another 62 percent will never move from their current home.
They Have No Plan to Move
“Americans are essentially staying put in their homes for the foreseeable future, either by choice or by necessity or some combination,” said Bankrate.com Senior Economic Analyst Mark Hamrick in a press release.
“Because of this, prospective homebuyers are finding a real lack of quality, affordable inventory, which can lead to bidding wars and risky overspending.”
Hamrick said homeowners aren’t willing to jump into a housing market plagued with historically low inventory levels, record-breaking home price growth, and mortgage rates that are inching closer to 5 percent.
And that’s not all, since the housing crash in 2007 – 2008 there isn’t nearly as much housing being built was during the last bubble. There may be a bubble in prices this time, but there does not appear to be a bubble in construction.
The Liberty Conservative said recently, “A look at housing starts in recent years shows that in raw numbers, starts are still not even close to getting back to where they were during the last boom. “
Moreover, since 2010, new construction has rebounded remarkably little.
Last year, the Kansas City Fed produced a similar analysis, and the results were pretty much the same: new housing construction, taking household growth into account, now remains near a multi-decade low.
Bottom line, the supply of housing is not recovering to more historically normal levels.
This doesn’t mean demand for housing has gone away, of course. Population growth has not contracted as housing construction has. Vacancy rates are down, and housing prices in both rental housing and in single-family housing continues to head upward.
What all this means to me:
This is a great time to purchase an investment property for passive income. Rents are rising, there is little housing supply coming online. Construction of single-family and multi-family housing is not keeping up with demand, and interest rates are still low.
If you buy an investment property, you want to purchase it strictly for the purpose of generating income. You may not consider your current primary residence nor a vacation home used only by your family as investment property. An investment property is usually purchased with the intention of either renting it out or renovating it to resell at a profit.
A few of the benefits of Investment Property for Passive Income
- Double the Profit Potential. An investment property offers two opportunities for financial gain. The first is rent that can generate a return to supplement your income, and the second is appreciation. Appreciation that can result in a sizable profit when the property is sold. There may also be tax advantages available, depending on your financial profile.
- Little or No Money Down. Unlike the stock market, you can enter the world of property investment with a relatively small amount of money. Among your financing options, you’ll find loans requiring little or no money down. There are even options that let you use the equity from your current home to purchase your investment property. That leaves your liquid cash assets available for other investment opportunities.
If interested in passive investing opportunities in real estate and returns of 6% to 12%? Give us a call.
Terra Firma Property Solutions, LLC is a professional, full-service real estate solutions firm.
We buy and sell properties throughout the greater Kansas City area. We specialize in buying distressed homes, then renovating and reselling them to home buyers and landlords. Terra Firma Property Solutions: excited to be part of the economic rejuvenation of Kansas City and its surrounding areas.
Call us today at (816) 866.0566
