Something that has been in the news a lot lately and that we have even seen here at Real Property Management Central Arkansas, is a shift in the demographics of individuals who are looking at investment properties. Additionally, this seems to be a general trend in the housing market in general.
The Baby Boomers are Taking Over
When we work with individuals during their search for an investment home for rent in the Little Rock area, we’ve found that the age demographic in which individuals are now purchasing investment properties has risen. There has been a strong increase in individuals that are mid-career or older investing heavily in the real estate market. This is the baby boomer generation that has been taking advantage of the dip in the real estate market in 2008. This in turn, can drive up the overall cost of housing in many areas. Fewer young individuals are able to buy a home, let alone an investment property.
So, what would have to change in order to get a more diversified group of individuals investing in rental properties? Consider the following reasons younger individuals are opting not to get involved in real estate investments.
If you don’t have student loans, or you did prior to the drastic rises in tuition prices, then you may not know how much student loans can affect a younger generation’s ability to buy their own home, let alone an investment property. This can be caused by not just the sheer amount of debt that student loans place on a family, but also by the fact that many younger individuals have poor debt to income ratios, where they have too much debt to allow them to add more with a home loan based on their current income. The burden of student debt is great and affects so many different aspects of society, including the housing market.
In addition to many young individuals carrying high student debt, they are also receiving lower wages based on the cost and value of consumer goods. While wages steadily rose through the 70s, 80s, and into the 90s, in the 2000s, wages became more stagnant while the cost of goods still continued to increase. This makes it harder for younger individuals to find money for down payments or money to maintain a rental property, even if it is managed exceptionally well.
Disappearing Affordable Housing
Many cities which offer the jobs that younger individuals are looking at also have higher rent rates and overall cost of living. Once again this can pose a challenge for younger individuals and their ability to save and also qualify for a mortgage on one home, let alone two.
So what does this all mean for the rental market and investment properties as a whole? There will have to be some drastic changes in order to allow younger individuals to more evenly break into the investment property world. Wages will have to go up overall and the housing market will have to cool down. But one thing is for sure, there is always a need for good rental properties with good property managers in large cities. Read more about the services provided by Real Property Management Central Arkansas today!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.