The only three things that mattered in real estate used to be location, location, location. But these days, it’s supply, supply, supply. Recent headlines echo the same news – “home prices are surging as the housing supply shrinks.” Read more here, and here, and here, and here.
Since 2008, the homeownership rate has fallen while rental numbers – and rents – have risen. Homebuyers seeking homeownership increasingly are competing against large corporate interests buying single family homes for rental purposes. Even political TV commentators apparently have joined the bandwagon to set up limited liability companies (“LLCs”) to own thousands of single family homes for rental.
What does this mean for homebuyers seeking to own their own home? The LLCs purchasing these homes have ready cash to buy, whichuts homebuyers using mortgage financing at a disadvantage from the start. In many cases, homes don’t hit the MLS before they are sold to investors in back-room deals. Moreover, due to rapidly rising rental rates, the economics of real estate mean that investors can now make more by renting than by flipping in many markets.
The challenge for those promoting homeownership is twofold: Continue to find housing stock for the supply-side of the equation and continue to search for capital that can compete with the LLCs. Programs like NCST’s First Look, other local REO disposition programs, and real estate tax sale opportunities are a few of the solutions available for parties looking to acquire single family homes for the ultimate use of homeownership. Capital is another issue that requires a common voice to urge progress in this area, including supporting new ideas such as the Neighborhood Homes Investment Act.
In short, we cannot give up on single-family homeownership even in the face of changing economic times. Continuing to push for ideas and initiatives to support that homeownership is essential to the long-term health of our neighborhoods and housing markets as well as to the financial health of individual families.
Rob Grossinger serves as President for NCST.