Yesterday felt very reminiscent of 1997. Recently, I met with a client over drinks, and she mentioned that she didn't understand how the housing rental market tightens up and slows down.
When more people can afford to purchase homes, there is less demand for housing rentals, so prices adjust accordingly. Conversely, when money becomes expensive to borrow, meaning interest rates on borrowed money (home loans) increase, fewer can afford to purchase homes and the rental market maintains a steady pace due to continued demand.
The rental housing market in San Francisco is reaching a point of high demand. Interest rates on loans are holding steady at the moment, but rates are still higher than they have been in the last two years. In addition, buyers looking at the lower end of the housing market are facing future uncertainty with some of the risky loans , such as interest only loans or 3 to 5 year adjustable loans, which allow them to enter the housing market. Many such buyers are staying put in their rental housing.
So begins the Renter's Nightmare. On Monday I posted a 1 bedroom apartment for rent, with an open house to show it yesterday. There was a line at the main entry when I opened the door, I received 11 applications in 1 hour, and enough hints of possible bribing and personal stories from strangers to hold me until the next vacancy. Which most likely, will probably be a long way off.
For the entry level home buyers that are still ready to buy, there is good news. Inventory on the lower end of the market has increased significantly in the last quarter, offering new opportunities by way of pricing rather than risky loan tactics. Additionally, rates for fixed loans are holding steady at nearly the same rates as adjustable loan rates. Because the market has slowed, sellers can be less picky about what type of financing is chosen by the purchaser, which means that a no money down or 5% down offer could still seal the deal.
Have more questions about buying or selling real estate? Ready to buy or sell a home? Contact me today for honest, experienced answers.
ablakeley at mcguire.com