MReport March 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 19 of 67

18 | M R EP O RT COVER STORY be willing to buy there and be able to buy because of the lower price points." Balce said people want to become homebuyers in areas that become economically stabilized. Conversely, she said Detroit and Memphis, Tennessee, are having people spend more on rent than they would in mortgage payments. Balce added that people in these areas need education about FHA, VA, and other loan programs that could make access easier, in addition to what cities are regulating what gets built—in- cluding Opportunity Zones that can focus on increased supply of affordable homes. Residential Investment, Heading Into the New Decade I nsight from CoreLogic in 2019 found that, by the end of 2018, the investment rate in the U.S. housing market reached 11.3%— the highest rate since CoreLogic began tracking data in 1999. The investment purchase rate in 2017 was at 11%, an uptick from between 2012–2014 when investor rates reached 10.3% and 10.9%. While sinking affordability is leading a rise to opportunities for investors, Arabi said "our industry is definitely under attack." "Historically, we've been de- fragmented to the point that we will become a very easy target for municipal politicians, state gov- ernment to be able to put in new regulations on the industry," Arabi said. "Housing is such an integral part of the American Dream. And quite frankly it does offer or per- suade the public votes. And that's why politicians are very excited about introducing something that may get them votes." Pintar said you'd "had your head in the sand" if you're miss- ing the political actions being taken to keep rental affordability in check. Pintar noted that his home state of California recently came out with a new round of rent regulations, where property managers are still allowed to get a 5% annual increase plus the consumer price index. This role, Pintar says, will ul- timately hurt the renting popula- tion, especially in a strong market. Arabi added that it is also not easy to make money in invest- ment. He used the example of introducing a rental inspection fee, which he said the financial effect is "quite sizable." Arabi said, "Because you take the cost for that fee, multiply it by how many rentals you have in that municipality, then that would be the revenue that the municipality would receive out of it. And as you can see, a $50 or $100 fee could generate millions of dollars depending on the number of rentals within that municipal- ity—millions of dollars of revenue for those municipalities." The best way to keep up with changing regulations is to partici- pate in organizations, such as the National Association of Realtors, the National Rental Housing Council, and Five Star, he said. He added that it is vital for prop- erty managers to be educated and vote on issues that affect single- family rentals in your metro. "At the end of the day, all of those regulations are going to affect you and you need to make your voice heard," Arabi said. Pintar noted that his home state of California recently came out with a new round of rent restrictions, where property managers are still allowed to get a 5% annual increase plus the consumer price index. This role, Pintar says, will ul- timately hurt the renting popula- tion, especially in a strong market. "You've had instances in the past where landlords haven't done anything to increase the rents, they just wanted to maintain happy ten- ants. Whereas now they're saying, 'Shoot, if I don't at least ask for my maximum, I'll never be able to catch up,'" Pintar said. "You're going to start seeing a lot more increases on tenancies in homes that they've never seen before, and 5% plus consumer price index is still really strong. So it's definitely an impact, and you wish the government would stay out of private invest- ment, but it's kind of the rules that we have to play with." Pintar said that the "continued evolution" of the industry—the buying, holding, and aggregating the property at one time—is still a great strategy. "But what we're also seeing is a great opportunity to actu- ally build and create your own inventory through build-to-rent communities, where you've got a lot of land. Instead of building out 200 homes for sale, you build out 200 houses for rent and give your- self incredible optionality in the future as the investor, on how to manage that asset in one commu- nity, but also provide a really nice product for your customers, the tenants that are choosing to rent, but want to be in that new home community feel," Pintar said. Arabi said experience is key and that experience in the investing community is becoming better by the day. He added that more investors are getting access to data to make "rational decisions" with needing to physically be at the property. He said iBuyers are a great example of how access to data is changing the landscape for buying and selling homes. "At the end of the day, it's the ability to basically buy right, operate right, and produce the financial results that you planned on when you made your purchas- ing decisions and access to data, access to good softwares, and good platforms would allow you to be able to match those three bullet points together," he said. . A graduate of the University of Alabama, MIKE ALBANESE has worked for news publica- tions since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, and sports and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the Pilot Point Post-Signal and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the Dallas Morning News and the Denton Record- Chronicle over the past several years. "I see it mostly as a positive, because you're seeing this economic and housing and recovery extend more broadly to neighborhoods that in the past may have been overlooked or left out of these types of recoveries. —Daren Blomquist, VP, Market Economics,

Articles in this issue

Links on this page

Archives of this issue

view archives of TheMReport - MReport March 2020