An Alarming 75% of Homes Are Too Expensive For Buyers
Summary
This article discusses the current housing market and highlights the affordability crisis, with rising rents and interest rates. It emphasizes the importance of understanding renter affordability and offers strategies for investors, including exploring off-market deals and considering ADUs, to adapt to the changing landscape.
Key Insights
- •Over half of all renter households (50.3%) are burdened by housing costs and spend over 30% of gross income on housing.
- •Three-quarters of the homes currently listed for sale are out of reach for median-income earners. The median-priced house is about $440,000.
- •Renting is cheaper than buying. Realtor.com quotes a median mortgage payment of $2,040 versus $1,693 for rent.
Action Items
- ✓Consider adding ADUs to single-family homes to increase income.Effort: mediumImpact: medium
- ✓To determine affordable rent, multiply a prospective tenant's gross monthly income by 0.3%.Effort: lowImpact: medium
- ✓Look to off-market deal flow. Run direct-to-seller campaigns (letters, SMS, door knocking) targeting absentee owners, older landlords, and properties with liens or code issues that are not yet on the MLS.Effort: mediumImpact: medium
Tools & Resources
- →PropStream: Use data tools like PropStream to build lists.
Common Mistakes
- ⚠For many landlords who ignore what prospective tenants can afford, the rude awakening of a vacant apartment, followed by a drop in rent, is a reality in many cities.
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