If you cannot get out of your house, it makes it pretty hard to relocate for work. As a result, homeowners who are underwater on their homes are finding their options may be limited when it comes to looking for jobs[1]. In the past, “mobility has been the hallmark of the U.S. work force,” says CoreLogic chief economist Mark Fleming, noting that now many job hunters are finding their options “frozen” because their homes are so underwater that they are unable to sell. Many are opting to try to rent out their homes to keep cash flow coming in to pay the mortgage while they move elsewhere.
According to recently-released Census data, since 2006 the number of renting households has grown by about 700,000 a year while households that own have fallen by about 200,000 a year[2]. While many realtors, not surprisingly, are calling renting a “Band-Aid” rather than a real solution, other analysts argue that the fact that Americans are electing to rent is a good sign that people are being more careful with their money and that it is unlikely that another housing crisis could follow on the heels of the first.
Do you think that for real estate investors the trend toward renting is a positive one?
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[1] http://lifeinc.today.com/_news/2011/06/01/6764471-bad-housing-market-hurting-some-peoples-job-prospects
[2] http://www.slate.com/id/2295851/
Sure it’s a positive one. People will always need shelter. Many today whether they’re in pre-foreclosure, foreclosure, underwater, or sneaking away in the middle of the night: this article describes the 2M shadow properties coming our way and many (like me, a Realtor) who don’t have options. The jobs available in NEPA mimic the “jobs” available in most parts outside of any rural area: non-existent. Renting is on the rise and will continue to rise as I advise all of my “buyers”. “Why be on the hook for 30 years when in two years after you’ve moved into your “dream home” and a new 20-something know-nothing moves in next door and has a South Beach party each night till midnight? You want to be the one to tell him to turn it down? Good luck. What good is a great rate if in two years you lose your job? Don’t make the same mistake I did.” Go renters! Who? Mark Zuckerberg? Who did I just say? Yeah, but the house is only $50k? And in a slum, or in the middle of nowhere. Where’s the nearest work? Oh, that’s right, 76 miles away, one way and no competition for that one job opening right? Good luck with owning. The point again?
As investors, we can resell properties or lease them out, and if they cash-flow on a lease, it’s all good. In the end, though, we need to get government’s hands off the housing market, and the market will then take care of itself. Matter of fact, why don’t we get government’s hands off of everything. Vote free market, small government, constitutionalist “Tea Party” type candidates into office.
Peak employment for the United States occured arround 2001 just before 9/11. Just before that, NAFTA was signed and the internet took off which meant both blue collar and white collar jobs are going overseas and WILL NEVER return. So sad an ending to a once great country.