Realty Trac just released a report showing that the average estimated monthly house payment increased 21% form one year ago. Seems there has definitely been some appreciation in the housing market.
To many real estate investors, increasing payments may sound like a good thing. We think that with rents going up we will make more money. We think that with home prices going up we can flip them for more profit.
But rents and home prices are not the only things increasing. Almost everything is increasing in price these days. Have you checked out your grocery bill lately? Ground beef for example rose about 5% in price in 2013 and it is predicted to jump another 5% to 7% this year. Coffee is up over 20%. Gas is also at a 5 year high.
One has to wonder if everyone can afford all of these higher prices. Will we see increased stress from our renters with more late payments? Will they be moving to more affordable locations or adding roommates? I have a feeling we will. Time will tell.
What do you think? Are your rents going up? Are you still able to command higher rents? Are you seeing any payment stress from your tenants? Let me know with your comments.
People are downsizing to more affordable housing! My working class rentals INCREASINGLY accept applicants from “higher end” hourly earner, ie. Corrections Officers, Dental Hygeinist, Veterens, and Insurance Claim Adjusters.
The pin pricking on their wallets is leading them to downsize their biggest expenses, and they are moving into the “nicest” homes in a lower priced neighborhood out of necessities.
If you’re in the subset I am in, you notice its taking place daily and quality of tenants financially keep going higher.
Interesting observation.
I think you are right on here. These “higher end” hourly earners are not going to have the reserves to cover their expenses like other segments of the population will.
But the scenario is working out well for you as you are getting a better quality tenant. Great observations, thanks for sharing them.
Kevin