The outlook for the U.S. economy and housing market for 2017 is showing moderate growth and a growing demand for rental properties. A slow U.S. economy and high home prices are creating the perfect storm, leading potential first-time home buyers to sign leases instead of mortgages. As the demand for rentals increases, developers are not keeping pace. This presents a unique opportunity for real estate investors. Let’s break it down step by step!
2017 U.S. Economic Forecast
In a recent article, Forbes points out that Americans might be once again approaching their borrowing limits. As individuals borrow for their education, home, and lifestyle, they can only go so far before hitting their credit limit. While the borrowing initially stimulates spending, once the cap is hit, spending slows and the economy tightens. We saw this in 2009 after years of consumer spending and growth spurred by home refinancing.
Most recently, the 2016 American economy was squeezed by reduced petroleum drilling, reduced gas prices, and the strong US dollar. Increases in consumer spending and residential construction point to a slightly stronger economy in 2017. The new year will bring moderate growth, the kinds that is conducive to long term economic gains. Across the United States, home prices are up steadily since recovering in 2012 and are projected to increase by roughly 3% on average for 2017. Keep this forecast in mind as you plan your real estate investment goals for the year ahead.
What This Means For Real Estate Investing
Home prices are rising faster than income, according to U.S. News. In fact, while home prices have increased at a 5.9% annual rate since 2012, after-tax income for Americans has grown by only 1.3% during this same time period. For younger Americans, this gap between rising home prices and rising income means they can’t take advantage of low interest rates. As a result, the current economic situation is driving demand for rental properties. While residential construction for both single and multi-family units is growing, it is not meeting the current rental demand.
Real estate investors can take advantage of the current climate by increasing their rental portfolios. Forbes notes that even with higher home prices, the fundamental economics of renting will be favorable for the foreseeable future. By purchasing single family homes, rehabbing or repairing them, and renting them, real estate investors can grow their businesses and help fill a void in the current housing market.
Real Estate Investment Strategy
For HomeVestors® business owners, now is the perfect time to rely on the proven systems we have in place. HomeVestors® has national brand visibility, which draws motivated sellers to contact us to sell their houses. With unlimited seller leads, we use a proprietary property analysis software to value the house and to assist in making the purchase offer to the seller. Additionally, business owners can rely on their built-in nationwide network of real estate investors for advice, market insight, and strategy tips to capitalize on the current demand for rental properties.
Of course, rentals are just one part of a robust real estate investing strategy. I coach HomeVestors® business owners using three core real estate investing strategies: wholesaling, renting, and rehabbing. While I still recommend a mixed approach – and one that is aligned with your financial standing and long term goals – 2017 is looking like a good year to build your rental portfolio. Since the economy can fluctuate, and new trends can emerge, a smart rental portfolio includes an exit strategy.
As a Development Agent for HomeVestors® of America, I have seen first hand how our proven system can give real estate investors the tools they need to grow their businesses and weather the economy. A franchise gives you a few real estate investment weapons that you can’t find anywhere else:
- A nationally recognized brand that attracts motivated sellers
- A proven business system
- Proprietary real estate analysis software
- An extensive network of motivated and experienced peers
- One-on-one support through local coaching and mentoring
If you want to discuss real estate investing and learn how HomeVestors® can help you reach your goals, let’s talk.
Call me today at 828-989-3785 to discuss your HomeVestors® real estate investment business opportunities.
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