Tuesday, April 18, 2017

Historic Decline in Home Ownership affects Economy, Bodes well For Investors

In a Wall Street Journal article form March 27, 2017 by Laura Kusisto, as well as in a few blog entries on WSJ, the point is made that home ownership in the US is at a historic low. At 63.7% home ownership, it is the lowest such number for the past 48 years!

Reasons given for it include more strict lending practices following the recession. Perhaps another issue is that the recession is still fresh enough to have taken the belief away that your home will “always appreciate “ in value and will serve not only as a residence, but as a major lifelong investment. Some people may no longer think so.

Add to that the natural desire of people to be free to move at will, and we have only 63.7% homeowners in the US as of the 4th quarter of 2016.

As investors, of course, we are quite familiar with the powerful financial effect owning houses can have on our future, especially if we finance them with the incomprehensible 30-year fixed loans still available, and at still super low rates.

Having 63.7% homeownership percentage means, of course, that a full 36.3% of the population are renters! That is about 117,000,000 people!

Those of us who know the value and power of investing in houses and holding them as rentals, can only look at this statistic as a positive – obviously these renters need a place to rent and we will have a larger renter pool available for our homes. Sure some single people may want to rent an apartment, but families usually prefer renting a single family home.

Coupling this data regarding the highest number of renters available to us in nearly 50 years, with the still-low interest rates available on 30-year fixed rate loans, means this is an excellent time to stock up on single family homes as investments.

Interest rates are on the way up. The fed keeps reminding us they will continue to raise rates. Having a period of such low rates (despite the small “Trump Bump” we experienced recently), makes it a special time to buy and hold.

If you are under the FNMA allotted 10 loans per person (20 per married couple if they buy separately), it is high time for you to go out there and purchase brand-new single family homes in good areas, finance them using these great 30-year fixed rate loans, which will never ever keep up with inflation (thus they will get eroded by inflation as to their real dollar value). The homes will be managed by local property managers we use ourselves in the various cities in which we invest.

We will discuss this as well as many other important topics for investors, at our quarterly ICG 1-Day Expo near the San Francisco Airport on Saturday May 20th. We will have experts lecturing on important topics, lenders, market teams from the best markets in the U.S., and lots of Q&A, networking and learning. Just send us an email at info@icgre.com. Just put in in the subject line, "Saw your blog on home ownership" and list your name and those of your guests. We will confirm!  See you on May 20th. 



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