Why Real Estate Investors Are Still So Bullish On Income Properties
Why are real estate investors still so bullish on investing in income properties with all of the rumors of an eviction crisis in the news?
If you tune into the news media every day, it’s hard not to see all the doom and gloom about the state of the housing market. There are politicians asking the government to extend eviction moratoriums, despite the CDC deciding it was time to end them. Others, warning of an eviction or foreclosure tsunami want new eviction bans, despite the fact that judges have already ruled them unconstitutional or have reversed them.
Yet, many investors only see the sun shining, and are experiencing their best financial years ever.
Is The Sky Falling?
Log on to the web today and you might think the sky is falling, and the ceiling on housing is coming in. Of course, tragedy and fear has always sold more newspapers and clicks than good news.
Some eviction hurdles still do seem to be in place anyway in some states. Foreclosure moratoriums for some mortgages have already effectively been extended until 2022.
The Truth Based On The Data
So, how do the actual figures compare to fantastical clickbait claims online and on TV?
According to Fortune and the Center on Budget and Policy Priorities (CBPP), only around 15% of the adult renter population is actually late on their rent. This drops down to just around 6% in states like Maine. This seems like a very normal rate, even in a perfectly healthy and strong housing market.
It is also important to remember that this may include renters who are just a few days late on the rent, as well as the few extreme cases where renters have chosen to spend the rent money on new TVs and entertainment for months instead of paying their landlords.
Also note that those most at risk, in Section 8 housing, already have their rent paid by the government. In places like NY, there are still billions in funds to be delivered to landlords for rent. The government has only released a few million so far.
When it comes to mortgages, CoreLogic reports that mortgage delinquency rates began falling again in April. Nationally, only 4.7% of homeowners were 30 days or more late on mortgage payments. Compare that to the Federal Reserve reporting around 20% of mortgages being delinquent between 2005 and 2008.
Rents have also been rising fast. With many areas seeing rents up around 20% over the past year.
Summary
While sensational claims may sell more newspapers and online ads, the actual data being reported suggests the housing market is very healthy. In fact, it may even be healthier than normal by some data points.
With defaults low, interest rates low and rents rising, it’s no wonder investors are bullish on putting more real estate into their portfolios right now.
