In today´s blog post..
- Feedback from a fascinating conference I attended in Miami recently
- How the economy and foundations of the current real estate market are different to 2006
- PLUS: Details of the new Torcana.com website
Will there be another housing correction in the US?
I was in Miami a couple of weeks ago (16-18 May 2016) at a large B2B conference. It was a terrific networking event full of real estate investors (large & small), lenders, insurance firms, renovation companies, specialist technology platforms and much more besides. The entire event was geared towards people who work in the business of single family home rentals.
Aside from having 20-30 face to face meetings during an intense three day period, I also attended a dozen or so seminars with titles such as
"The Single Family Home Market in 2016 and Beyond"
"Buying in bulk vs buying individually"
"Major markets for foreclosures and property rehabbers"
"Exit strategies for small investors"
One of the major lessons I took away with me was that those who are sitting on the sidelines until the next correction in the US housing market comes along are going to be waiting a long time. There are several reasons for this, which I´ll try to explain briefly.
In the last 7 years we have seen a HUGE transfer of ownership from unqualified owners getting "no doc" loans to highly qualified owners passing stringent tests. The people who have been purchasing US property since 2009 are probably the most qualified in the last 50-60 years. Indeed, the default rates of the "post crash" borrowers is just 0.5%, which is half the long term average of 1%.
These buyers have high FICO scores, solid incomes and many have secured ultra fixed interest rates over 25-30 years. There is no way they are going to be forced to sell at fire sale prices the way the previous generation was.
Investors who are currently building rental portfolios are also in an extremely strong position. Rental demand from millennials, retirees and regular people with solid incomes is higher than it has ever been. Average values of the rental homes they´ve purchased have increased for 50+ months in a row and rental rates are on a steady upward curve.
Torcana is on the coalface of the single family home market in Tampa, and I can tell you that inventory is extremely scarce. It is a constant battle to secure great value rental properties and competition is fierce. A typical three bed, two bath single family home with a fenced yard and 2 car garage is incredibly difficult to purchase as everybody wants to buy them.
I am under no illusions that buying rental properties is going to get easier in the near future. It will get more difficult and I´ll have to work harder and get more creative to find them. The Torcana team are well aware that this is a dynamic market with lots of buyers.
As for builders? They aren´t building anywhere NEAR enough to cope with natural demand and they show no signs of doing so. One of the facts I picked up during the Miami seminar was that there were 5 million existing homes sold and less than 500,000 new homes sold last year. In other words, there are 10 times more second hand properties being sold than new properties.
Tampa is the real deal
Affordable real world markets like Tampa are not going to drop any time soon. In terms of prices and rental income, this is the most stable market I´ve seen in my 15 year career. The trend of high demand and limited supply is absolutely set to continue.
The last two homes we advertised in our newsletters both sold within 1-2 days. We have several more really great houses in the pipeline and we´re confident they will sell equally quickly.
If you´d like to schedule a call to discuss what we have coming up, please let me know and I´ll be happy to fill you in.
Finally, a quick word on our new website..
The Torcana website was redesigned recently, and I thought you might appreciate a quick preview! We have been working hard behind the scenes to provide a great source of information for anybody interested in learning more about buying turnkey rental properties in the USA, particularly Florida.
Here is a quick summary of what is available and any feedback would be very welcome indeed.
1. A wide range of free to download market reports including:
- Buyers guide to Tampa Florida
- Comprehensive 77 page track record with before & after pictures
- 20 Things to know when investing in the real estate market
- The five biggest real estate mistakes to avoid
- General guide to investing in the US rental market
2. Access to our Podcast Archive (I´ll be recording another one later this week)
3. Hundreds of articles on the Torcana Blog
4. A new look property listings section with interactive maps, photo slides and videos
(full details of new homes will be added very soon)
5. Detailed articles on each of the investment property types we target (public & private auctions, bank owned foreclosures, distressed sellers etc.) will be published in the near future.
That´s it from me today!