Home prices fell 3.5% in the past year and mortgage rates are at record lows. One would think that borrowers would be flocking to their nearest real estate agent to buy the next home they can find. However, homebuyers are not coming out of the woodwork—yet.
Many homebuyers are investors looking at foreclosure properties, buying them low, fixing them up and then renting the properties out to borrowers until home values start to increase.
As we move into 2012, rental homes can become a broad new market segment as borrowers seek to live in the same (or similar) homes they once owned as renters, and as others choose single-family homes over apartments and desire to become eventual homeowners. The community and a sense of permanence in a home are reasons to strive for the single-family residence experience, whether it is by owning or renting a home.
A community environment means friends and neighbors working together for a sense of common well-being and lifestyle improvement, usually for the benefit of families. For this reason, preserving the single-family home does matter. It retains a sense of permanence in the community and occupied homes translate into preserving common interests, which will increase the value of the home itself.
Potential homebuyers want to know their neighborhoods and be assured that their neighbors have a similar personal investment in their properties, adding a sense of permanence for themselves and their families.
Neighborhoods change and owners buy and sell homes all the time. But having motivated occupants, even if they are renting, keep neighborhoods vibrant, make communities more robust, and instill pride in the family home. A great many people desire the lifestyle the single-family home can bring, along with the stability and sense of community that these neighborhoods provide.
A house, whether rented or owned, becomes a home when there is commitment and a community. Minimizing vacancies through whatever means does more than keeping values more stable. Preserving the single family home benefits everyone, regardless of where they live.
Steve Horne is CEO, Wingspan Portfolio Advisors.
