It seems like every month we’re reading or hearing about the resurgence in home sales and prices. I’m confident that in most regions of the country the bottom has been established for the housing market, yet it’s good to see more clues (data) that confirm that the housing bust is over for now.
Property managers often look at this as a mixed bag, but as I’ve stated repeatedly in my articles, the need for rental housing has never been greater. The government and the lenders who have foreclosed on hundreds of thousands of houses aren’t just giving them away to anyone who needs one. In fact, the people who are usually first in line to buy distressed properties are investors who are motivated by powerful incentives to buy and convert the units into rentals. If that isn’t good for property managers I don’t know what is.
These investors don’t want to manage the property or the relationship with the residents, so they hook up with a property management company they can rely on and sign the deal. If you’re not one of those property managers, now’s the time to begin to network with realtors who do business with these investors. Shameless self-promotion is the order of the day for many businesses, and property management is no exception. This involves more than handing out your card and shaking hands with as many potential owners-clients as possible. It takes having an exceptional suite of services to offer and a reputation to back it up with.
The latest housing numbers tell us that December 2012 existing home sales were below expectations, declining 1% sequentially vs. the positive 1.2% consensus estimate to an adjusted annual rate of 4.94 million units. However, the unit level was the second-highest reading since 2009. Year-over-year (YOY) the number of home sales that closed was 13% higher than Dec. 2011. The projected sales in 2013 are for a 9% increase over 2012 levels which would be the strongest volume since 2007 and the highest since 2004.
Speak with any real estate agent who specializes in selling homes to landlords. They’ll usually tell you that business hasn’t been this brisk since the days of no-document mortgages. In fact many potential rental units for sale are sold the first day they’re listed. Sales of single family homes continued to rise on a YOY basis by 11.5% and are essentially at the same robust rate from the 11.6% in November 2012 and easily ahead of the 9.4% increase back in October. The inventory of unsold homes (nationally) fell to a 4.4 months supply from 4.8 months, the lowest level since May 2005.
The “distressed sales” I referred to earlier were 24% of the total volume of homes sold in December, up from 22% in November. If you like data and statistics take a look at a page called “The MarketPulse” compliments of Core-Logic. Last year was a big step forward for reducing the number of distressed sales yet it also saw an increase in the number of former homeowners who are now seeking rental housing. As Core-Logic stated in summary, “Rising home prices will continue to slowly release pent-up supply as under-equitied borrowers are unlocked and opportunistic sellers begin to provide relief to tight inventories.” This means that the supply of homes for sale will be going up starting in the spring of 2013.
Many of these sellers will have to find rental units for their housing needs because they won’t be able to qualify to buy a house until their circumstances improve. This cycle will attract more income-seeking investors and client-owners who will need qualified property managers to handle their properties. My advice is to be preparing to accommodate more clients and utilize the latest technologies to efficiently be able to handle a bigger base of residents and rental units. This is an opportunity that many have waited a long time for and it’s a career-maker for proactive property managers.