Despite the fact that increasing vacancy rates have not been in multifamily owners’ favor for the past two years, there are a few determining factors that will keep renters renting:
- Stricter lender requirements for home buyers
- Low home inventory.
From 2006-2008, anybody with a pulse could leave the rental market and buy a condo or house. Following the Great Recession and the tightening of lending standards, including more rigorous credit checks and documentation requirements, it has become significantly harder for first time home buyers to qualify for home loans. This has forced potential buyers to stay in the rental market for longer. In 2010, first time home buyers made up 50% of all home buyers nationwide, whereas first time home buyers made up 32% of all home buyers in 2023.
Home owners who bought or refinanced between 2020-2022 and secured a 2-4% interest rate on their home loan are not selling as readily as they normally would because they are resistant to give up their prime interest rate. Because of this, inventory for existing homes is slim and home sales have been down in the last few of years.
The average home price in Spokane is currently $425,000, which is a 0.9% year over year decrease for September. Although recent improved interest rates may slightly increase inventory levels and the number of home sales, owners will most likely still not want to risk their superior 3% interest rate..
Fewer home sales translates into a prolonged reliance on rentals, which can lower vacancy rates and help apartment owners like you.
Please reach out to discuss how this may affect your portfolio!
Jordan Lester, CCIM, MBA joined SVN Cornerstone as a Commercial Real Estate Broker in 2022. Jordan specializes in advising clients with the acquisition and disposition of multifamily investment properties. With a primary focus in Spokane County and an expert understanding of the latest market trends, Jordan is committed to maximizing his client’s financial goals to achieve their real estate objectives. Jordan began his real estate career as a broker’s assistant for three years with SVN Cornerstone, which gave him valuable knowledge and experience to jumpstart his career as a broker. To get in touch with Jordan, email jordan.lester@svn.com or call 509.496.6922