This post follows on a post that I did back in March, in which I discussed that there is such a tight rental market right now. Surprisingly enough, it was called “What Does a Tight Rental Market Mean?” I’m clever that way.
So, our friends at the Cromford Report have added an interesting thought to this conversation the lack of supply of entry-level homes:
“The most obvious source of new supply would be the large number of homes that are currently owned by landlords and used as rentals. However vacancy rates are low, rents are rising and these landlords would probably buy more properties if they could rather than sell them off. There are remarkably few new homes being built below $200K and if this situation persists, it is going to remain a very competitive struggle for buyers. Prices are likely to rise faster than earnings. This is good for current homeowners but bad for those currently renting and wanting to get started in home ownership. This could become even more of a problem if mortgage interest rates rise, adding to affordability problems for the first time home buyer.”
To put it another way, those folks who bought when the market was low and created cash-flow rentals have no incentive to sell. They are making money!
Unfortunately, this is shutting a lot of moderate-income buyers out of the market. It may be worse when interest rates begin to rise again at the end of this year.
So, if you are thinking of buying and if you are in this range, we need to talk! Call me at 602-456-9388.
Oh, and why “llamas” in the title? Well, I like alliteration.