2015 Market Outlook for Single-Family Rental Investors
It’s a new year full of new opportunities and B2R Finance has identified these five trends as those that will impact the single-family rental investment community in 2015. Here’s what to expect:
- An improving economy. The economy is on the upswing and experts expect it to grow at about 3 percent this year, better than 2014’s 2.6 percent. Homebuilding, consumption and investment all look strong, and falling oil prices are a positive for near-term growth. The plunge in oil prices is a boon for consumers and businesses, although some areas that depend heavily on the energy sector are bracing for layoffs. The unemployment rate has fallen below 6 percent and wages are predicted to rise as the labor market tightens.
- Low interest-rate environment. The low cost of capital has provided many investors with the opportunity to expand their SFR portfolios. According to Freddie Mac, mortgage interest rates in mid-January dropped to their lowest level since May 2013. Most economic experts expect the Federal Reserve to raise its federal funds rate, likely by mid-year, which means interest rates are forecast to rise. Still, the pace of such a hike is expected to be gradual and will remain well below historical averages for the foreseeable future.
- Home prices will moderate. We’ve heard it said that all real estate is local. Keep that in mind as we discuss home prices. Home prices moderated in 2014 with a 4.6 percent year-over-year growth reported in October, according to the latest S&P/Case-Shiller report, much lower than some of the double-digit increases of 2013. Some individual markets, where job growth is strong, will buck this moderating trend. The good news for investors is that there remains plenty of affordable housing for investment opportunities.
- Rental market fundamentals remain strong. When the housing bubble burst in 200-2008, the nation entered a financial crisis of historical magnitude. During this time, attitudes toward housing shifted and a new wave of renters was born. This renting mentality has remained strong even as housing rebounds. B2R Finance expects demand for rental homes to remain robust in 2015.
- Investor financing more widely available. When the single-family rental market emerged in 2012, it was largely the domain of financial services giants with deep pockets. That’s no longer the case as financing for investor-owned properties has become more widely available. The types of financing and underwriting used to finance rental home purchases have also evolved. B2R Finance, for example, focuses on the cash flow a rental property is expected to generate in making a lending decision. This is different from traditional mortgage lending that focuses on a borrower’s income. B2R expects an even better lending environment in 2015. It revamped its underwriting guidelines in late 2014 to make it even easier for residential rental investors to grow their portfolios in 2015.
B2R Finance is looking forward to providing continued financing opportunities in 2015 for residential real estate investors and to the brokers who serve these investors.
The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.