According to the latest Census Bureau data, the first quarter of 2012 saw homeownership in the United States fall to its lowest rate in 15 years. This is largely due to the fact that homeowners are continuing to lose their homes and are being forced to rent. In fact, the percentage of people who own their homes fell by a full 1 percent over the past 12 months, making it the lowest rate since 1997. At the same time, the rental vacancy rate dropped from 9.7% to 8.8% when comparing the first quarter of 2012 to the first quarter from the previous year.
Given these statistics, it should come as no surprise to learn that investors have been purchasing distressed properties and fixing them up so they can rent them out. Given the low housing prices that are still found in most markets coupled with the fact that the median asking rent went up by 5.6% when comparing the first quarter of 2011 to the first quarter of 2012, it is easy to see why investors are so interested in renting out their properties.
While purchasing investment properties with the intention of renting them out may be a good idea for those with the necessary cash flow, those who are looking for a place to live will fare far better if they purchase a home rather than rent one. This is because median home prices are continuing to fall on a nationwide basis. During the first quarter of 2011, the median asking price for vacant units was $143,700. During the first quarter of 2012, this price fell to $133,700. Still, many housing experts are predicting that prices will not get any cheaper than where they are right now. Furthermore, with mortgage rates being at historic lows, there has never been a better time to purchase a home.
Due to continued job growth and the overall declining rate of foreclosures, many experts predict home prices will flatten out by the third quarter and will begin climbing once more next year. Furthermore, demand for housing is likely to increase at this time as homebuyers get their finances back in order and begin to improve their credit scores.
For those who are still sitting on the fence, there is still a little time to spare before going out and making a purchase. Even as prices start to go back up, experts predict the gains will be modest in most markets. For example, some predict prices will begin to turn during the last quarter of 2012 and will increase by just 4.2% for the 12 months that follow through to September 2013.
About The Author – Kevin Koitz specializes in Downtown Bethesda condos, helping both buyers and sellers with their Maryland-related real estate needs. Get the latest Luxury DC real estate news from The Koitz Group blog.