Investor Intel: Opportunity Abounds for the SFR Investor
The chief economist of the National Association of Realtors is calling the third quarter of 2015 the best quarter for the housing market in a decade, and the head of the New York Fed gave a shout out to the housing economy, calling it “solid.” While housing has been good for a while now, October was a better month overall for the U.S. economy.
After a lackluster August and September, stocks have largely rebounded and October’s jobs report was the year’s best. October payrolls rose by the most in 10 months and the jobless rate fell to a seven-year low. Meanwhile, consumer confidence has steadied after declining for the previous three weeks as Americans’ views toward spending improved by the most in five months, according to the Bloomberg Consumer Comfort Index. Also, the University of Michigan’s preliminary consumer sentiment index for November climbed more than forecast. However, consumer discretionary spending is showing signs of lethargy.
Home prices nationwide, including distressed sales, increased by 6.4 percent in September 2015 compared with a year ago, according to CoreLogic’s latest home price index. This is up 0.6 percent compared to August 2015. CoreLogic also found distressed sales share at its lowest since September 2007. Distressed sales are expected to decline until reaching a “normal” 2-percent mark in mid-2018.
Interestingly, October foreclosure starts posted a 12 percent monthly jump—the highest increase in more than four years, according to the latest RealtyTrac Foreclosure Market Report. Despite this increase, foreclosure starts in October were still down 14 percent from a year ago.
October 2015 foreclosure starts increased from the previous month in 34 states, including California (up 21 percent), Florida (up 13 percent), Illinois (up 20 percent), Maryland (up 300 percent), and Michigan (up 37 percent).
What’s going on? For starters, it’s a seasonal trend. “However, the 12 percent increase this October is more than double the average 5 percent monthly increase in the past five Octobers, and the even more dramatic monthly increases in some states is certainly a concern,” said Daren Blomquist, vice president at RealtyTrac. “The upward trend in foreclosure starts in those states in some cases could be an indication of fissures in economic fundamentals driving more distress and in other cases is more likely an indication of long-term delinquencies finally entering the foreclosure pipeline.”
Something else we’re watching: First-time buyers made up 32 percent of all home buyers, down from 33 percent last year, and the lowest since 1987, according to NAR’s 2015 Profile of Home Buyers and Sellers. The report is more validation that millennials seem to be putting off home buying in favor of renting.
What are the top 10 U.S. markets where investors can buy single-family rental properties? HomeUnion examined 55 of the largest metro areas across the country, looking at median price, average gross rental yields, year-over-year job growth, and home affordability. Charlotte, N.C. came out on top thanks to its strong job growth. Here’s the full list:
- Charlotte-Concord-Gastonia, North Carolina-South Carolina
- Orlando-Kissimmee-Sanford, Florida
- Baltimore-Columbia-Towson, Maryland
- Cincinnati, Ohio-Kentucky-Indiana
- Jacksonville, Florida
- Birmingham-Hoover, Alabama
- Tampa-St. Petersburg-Clearwater, Florida
- Indianapolis-Carmel-Anderson, Indiana
- Milwaukee-Waukesha-West Allis, Wisconsin
- Nashville-Davidson-Murfreesboro-Franklin, Tennessee
B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit http://www.b2rfinance.com/apply-now and follow us on Twitter @B2RFinance.
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