Post by Kate Vandiver of The Mari Halliday Team
A new article originally published with the Wall Street Journal reports that demand for rental properties will continue to be high for the next 10 years. This demand leads to high rental prices and can put pressure on tenants.
An estimated 11% more households will pay more than half of their incomes in rent in 2025, according to a new report from Harvard University’s Joint Center for Housing Studies and Enterprise Community Partners, an affordable-housing organization.
The situation could have significant policy implications. Renters who are severely cost-burdened—meaning they pay more than 50% of their incomes in rent—often require federal subsidies to find an affordable place to live. The private sector is struggling to produce profitable housing that is affordable to lower- and moderate-income families, while many federal housing subsidies have been cut in recent years.
In 2013, one in four renters, or 11.2 million households, paid more than half of their incomes in rent. That is three million more households than in 2000.
While this is problematic for those renting, it also means it is a great time to purchase a home for yourself or as a rental property. Here in central Illinois, it is fairly common to get a mortgage for half the monthly payment it would cost to rent the same property. That leaves plenty of room to cover extra expenses including property taxes and home insurance. It also means that now is the best time to purchase affordable rental properties as there is no shortage of tenants looking to rent affordable housing in the Peoria area. I have witnessed this trend personally with my rental properties. Vacancies are few and far between as tenants choose to stay in affordable homes for longer periods of time. Any vacant units I have had in the last year have been rented within one week.
Read the whole article at: http://www.realtor.com/news/trends/renters-will-continue-to-struggle-for-the-next-decade-harvard-study-says-2/