Troubled Home Market Creates Generation of Renters

Source: http://news.yahoo.com/s/ap/20110524/ap_on_bi_ge/us_the_new_renters
By DEREK KRAVITZ AP Real Estate Writer
WASHINGTON May 24, 2011 (AP)

A growing number of Americans can't afford a home or don't want to own one, a trend that's spawning a generation of renters and a rise in apartment construction.

Many of the new renters are former owners who lost homes to foreclosure or bankruptcy. For others who could afford one, a home now feels too costly, too risky or unlikely to appreciate enough to make it a worthwhile investment.

The proportion of U.S. households that own homes is at its lowest point since 1998. When the housing bubble burst four years ago, 31.6 percent of households were renters. Now, it's at 33.6 percent and rising. Since the housing meltdown, nearly 3 million households have become renters. At least 3 million more are expected by 2015, according to census data analyzed by Harvard's Joint Center for Housing Studies and The Associated Press.

All told, nearly 38 million households are renters.

Among the signs of a rising rental market:
— The pace of apartment construction has surged 115 percent from its October 2009 low. It's still well below a healthy level. But permits for apartments, a gauge of future construction, hit a two-year peak in March. By contrast, permits for single-family home are on pace for their lowest annual level on records dating to 1960.
— The number of completed apartments averaged about 250,000 a year before the boom. They fell to 54,000 last year and will probably number around the same this year. But then the number will likely double to about 100,000 in 2012 and hit 250,000 by 2013 or 2014, according to the CoStar Group, a research firm. The lag is due to the time it takes for an apartment building to be completed: an average of 14 months.
— Demand is driving up rents. The median price of advertised rents rose 4.1 percent between the end of 2009 and the end of 2010, census data shows. Few expect the higher prices to stem the flood of renters, though. One reason: Younger adults don't value homeownership as earlier generations did and many prefer to rent, studies show.
— Rental housing is giving builders more work just as construction of single-family homes has dried up. Still, that economic lift won't make up for all the single-family houses not being built. Apartments account for only about one-fourth of homes. And renters are outspent roughly 2-to-1 by homeowners, who pay for items from lawn care to remodeling and help drive the economy.

Before the housing bust, mortgage rates were so low it was often cheaper to buy than rent. That was true a decade ago in more than half the 54 biggest metro areas, according to Moody's Analytics. Today, by contrast, it's cheaper to rent in about 72 percent of metro areas.

Consider Mason Hamilton, 26, an energy consultant who rents an apartment with his wife for $1,100 a month in Alexandria, Va., outside Washington. He'd like something bigger. But he says he doesn't plan to buy even though he could afford to.

"My parents always told me, 'You need to buy a place; you need to buy property,'" he says. "But the housing market is insane."

Many younger Americans see owning as risky. It hardly seems the best way to build wealth, especially when prices are falling.

"There's been this idea for years, a part of the American dream, that owning a home improves and strengthens communities," said John McIlwain, a senior fellow at the nonprofit Urban Land Institute. "But what we've learned over the past few years is that many people simply are not ready to own a home."

From the 1940s until 2007, homes appreciated an average of nearly 5 percent a year, adjusted for inflation. In the past four years, the median price of a single-family home has sunk 37 percent, by $57,500, to its lowest since 2002. Yet in some areas, owning is still too expensive for many.

"It's becoming so difficult for most Americans to afford a home, with larger down payments and tighter credit, that it is creating a renter's nation," says Robert Shiller, a Yale economist and co-creator of the Case-Shiller home price index. "The home is no longer an investment; it's a burden."

Homeownership bestows its own financial advantages, of course. Each loan payment builds equity. Loan interest and property taxes provide tax deductions. And in normal housing markets, home values rise over time.

But for now, renting is more attractive. Hamilton, the energy consultant, says his father, a 58-year-old teacher in Richmond, Va., still owes nearly as much on his mortgage as his house is worth.

"He's stuck in that house," Hamilton says. "After telling me to buy for all of those years, he'd love to rent like me."

Keeping Properties Safe Over the Holidays

Courtesy of Mary Girsch-Bock on propertymanager.com

We all know that November and December are the busiest months of the year for travel. That means that while your residents are enjoying their holidays, their apartment or home will likely be empty. While most residents are responsible and take proper precautions when traveling, is there anything property managers can do to ensure that the property remains safe when the resident is traveling during the holidays?

While you can’t police the property 24/7, you can provide some guidance to your residents on keeping their apartment or home safe while traveling. You may want to consider providing a sheet containing tips and suggestions for keeping their home safe. This sheet can be provided to your resident upon move-in, as a handy reference guide. While you may have your own suggestions specific to your properties, you should suggest the following to your residents:

* Be sure to leave a light on, preferably on a timer. Studies have shown that 90% of burglars target homes that are dark.
* Stop newspaper delivery. A pile of newspapers on the doorstep or in the driveway is a giveaway to the observant burglar that no one is home.
* Those living in multi-unit housing should consider notifying the resident manager that they’ll be traveling. This way, staff can keep an eye out for suspicious activity.
* Close and lock windows and garage doors. Burglars consider garage doors the weakest point of entry into any home. Back or side windows are also considered a prime point of entry because they are often hidden from street view.

While the possibility of a home burglary is a valid concern for travelers, it’s certainly not the only concern. It’s also important that residents remember to check and double check that all appliances (coffee maker, oven, curling iron) are unplugged. Residents may find it helpful to create a checklist and walk through the house, checking off each item on the list. This way they won’t find themselves trying to remember if they turned off the oven when they’re thousands of miles from home.

Nothing (short of armed guards) can guarantee that your resident’s home or apartment will be safe from burglars or 100% protected against fires. But taking some basic precautions will ease both the residents mind…and yours as well. Providing your residents with these simple suggestions can prove helpful, while keeping the property that you’re responsible for safe and intact.

Reminder About Your Yard

Just a friendly reminder to all of our tenants and residents living in homeowner's associations. This is the time of year when folks are getting more yard violation notices. In order to avoid this, please make sure to keep your lawn neatly mowed and beds free from weeds. Thanks in advance for keeping your property beautiful!

HELP! I cannot get along with my neighbor!

By Dawn Hardley, Property Manager

As Real Estate Property Managers we can do our job to the letter of the law but when it comes to trying to make two different parties get along, it is not “what we do.” We get dozens and dozens of the following complaints:

“My neighbor is making too much noise……….….”

“My neighbor is parking in my spot……………….”

“My neighbor is smoking outside my window….…”

“My neighbor throws their garbage in my can…….”

We could write a book with all the complaints. Rather than speaking with respect and kindness to their neighbor, it’s usually handled in a brash, rude tone, which does nothing but make the other party instantly defensive and just as brash and rude in their response. This type of action/reaction does not get anyone anywhere. Property Managers often feel like preschool playground teachers as opposed to professional real estate managers. HOWEVER, we have discovered a service out there that may be everyone’s saving grace……..they are called Community Mediation Centers and they are all over the United States and most recently online. The services are either free or very low cost, and they offer everything from resolution training, to advise, to legal counsel. The best reference we have found in our area is www.resolutionsnorthwest.org.

If you are having trouble with neighbors please check out this website (www.resolutionsnorthwest.org) and see if you are able learn how to get what you want and also maintain a wonderful neighborly living environment at the same time. Everyone wins! The people next door whose dog’s barking is driving you crazy could be the same people to call the police if they saw someone breaking into your house, call the fire department if they saw smoke, or be your only contact in a natural disaster. ALWAYS keep this in mind when dealing with sticky neighbor issues.

IF FOR ANY REASON you feel yourself or your family members are being threatened or may be harmed, DO NOT call your Property Manager. CALL 911 or your local Police Department FIRST THING.