Rental Demand in America Reaches Record Intensity
The health of the property market in America is worsening on a month-by-month basis for homeowners and rental tenants; yet for pure property investment, today is possibly the best time to buy in to the US housing crisis and profit from soaring rental demand and rapidly advancing rental yields. In the first quarter of 2008 US citizens’ overall net worth fell by 1.7 trillion dollars because house and stock values again fell sharply. Now 1.1 million homes in America are in foreclosure and the number of homes in foreclosure in February 2008 was up a staggering 60% on the previous February’s numbers. US real estate analyst Michael Larson from Weiss Research has been quoted as saying that there will be little change in this “toxic” situation for the coming few years, and his sentiments are supported by Jay Brinkman, MBA´s vice president for research and economics who advises that America is now entering the sixth straight quarter in which a record percentage of mortgages have entered foreclosure.
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This dire situation, described as a “toxic stew” by Larson from Weiss Research, is having a directly converse impact on the rental market in America. Never before in America’s history has the real estate rental market appeared so strong. Vacancy levels are falling across the whole of America at record rates, and in parallel to this massive upside pressure that is being exerted on supply, the rate at which rental rates are rising is dramatic with some states and some cities in America recording double-digit median rental rate increases on a quarterly basis. The average predicted increase in rental rates for 2008 across the whole market according to the National Association of Realtors is at least 5.3%.
Three specific factors are causing record rental demand increases across the whole of America – the rate at which homes are being foreclosed upon is forcing increasing numbers of former homeowners into rental accommodation as they can no longer keep up with their mortgage costs. First time buyers or current rental tenants wishing to purchase are finding it dramatically and significantly harder to gain access to mortgages, and there are those who are biding their time before they buy in who are demanding rental accommodation in the meantime.
In certain parts of the country there are additional factors creating a situation where demand for rental accommodation is increasing unabated and where rental rates are rising dramatically. In the Gulf Opportunity Zone for example, (the area of southern America impacted by Hurricane’s Katrina and Rita back in 2005), so much effort, outlay and pure investment has gone into rebuilding towns and regenerating communities that not only are former citizens returning home and requiring rental accommodation, but so much new employment exists that cities such as Biloxi and Gulf Port are witnessing strong levels of inward professional migration which also exerts pressure on the supply of rental accommodation.
In Biloxi for example, Danny Silver, principal of Property Direct America comments: “you have an unprecedented situation. The government of the United States has allowed developers to purchase prime land for housing development at well below market rates to encourage them to pass on these substantial savings to purchasers. You then have purchasers being encouraged to buy in and invest and house displaced citizens with government backed taxation and financial benefits which are available to all those who invest in property. Investors then benefit from returning rental demand, and because there are 22 casinos opening in the area and providing employment opportunities alongside the likes of Chevron, NASA, The University of Southern Mississippi and Naval Construction Battalion which are all substantial employment centres, investors also have large numbers of professionals relocating to the region to take up prime employment contracts who are also seeking rental accommodation – making it possibly the best time to invest in real estate in this part of America ever!”
One development that ticks all the boxes with buyers and investors in Biloxi is Bayside Park – it qualifies for all the government financial incentives, the below market value properties are for sale from $159,900 with mortgages available, and the attractive development is located in close proximity to great employment opportunities so rental incomes are estimated from $1300 per month for a 3 bedroom property. To learn more about these opportunities in the GO ZONE contact Property Direct America on 0207 043 0792 or visit www.propertydirectamerica.com.