Real Property Management Announces Positive 2017 Forecast for Rental Property Investors
SALT LAKE CITY–(BUSINESS WIRE)–Real Property Management, the nation’s leading full-service property management organization, released its annual economic report for landlords, which analyzes market conditions expected to contribute to the health of the rental industry. It predicts 2017 to be a bright year for single-family property investors, with key factors being rental and vacancy rates.
“Rental rate increases will outpace inflation in the coming year, while vacancy rates will remain stable,” said Bob Pifke, CMO of Property Management Business Solutions, LLC. “The market conditions that have made single-family home investments attractive in the past will continue in 2017, though it may be more challenging than before to find new rental properties. Foreclosure rates, housing price changes and mortgage rates will be important for those planning to buy or sell rental units.”
The Real Property Management organization predicts the following outlook for investors in rental and single-family residences in the coming year:
Rental rates will increase faster than inflation. The current $1,459 rental rate for a three-bedroom single-family residence will exceed $1,500 in 2017. The supply of single family rentals is unlikely to increase enough to offset new household formation and population growth. Meanwhile, the consumer price index was 1.6 percent for the twelve months ending October 2016. Moving forward, inflation is likely to exceed 2 percent, but will still lag the year-over-year 4.8 percent rental increase at the end of the third quarter of 2016.
Vacancy rates will remain in the low 5 percent range. Vacancy rates for three-bedroom single-family residences through the third quarter of 2016 was 5.2 percent, down slightly from the 5.3 percent rate at the end of 2015. We expect vacancy rates to remain at this level, because rental increases will stabilize demand.
Mortgage rates will increase. In December, the Federal Reserve announced its second Fed Funds rate increase in ten years. It is extremely likely that additional increases will be made during 2017. That means mortgage rates in the 3% range will disappear. We expect rates to be in the 4% range for 2017.
Foreclosures will remain at a low level. Per CoreLogic, the seriously delinquent rate for foreclosures is currently 2.6 percent – the lowest level since August 2007. Barring a shock to the economy, Real Property Management expects foreclosures to remain low in 2017. This will make it more challenging for investors to find deals.
House prices will increase faster than inflation. According to S&P CoreLogic Case-Shiller, the national home price increased 5.39 percent through September 2016, and is now $274,000. However, housing prices have not yet returned to their 2007 peak. With an improving economy, it is likely housing prices will continue to grow. As mortgage rates increase, many homeowners who previously refinanced will find a replacement home more expensive. This will dampen their willingness to sell their existing house and limit the supply of existing homes for sale. Builders did not increase new home construction in 2016 compared to 2015.
Real Property Management is the leading property management franchise in the nation, with more than 300 offices in 46 states that manage assets worth more than $13 billion. The company’s offices specialize in managing single-family homes, town homes, condos, multiplexes and small apartment buildings. Its services include finding and screening tenants, completing the lease agreements, collecting rent, arranging for any necessary repairs, and processing evictions when necessary. Real Property Management offices also manage the legal compliance for local, state and federal real estate law.
About Real Property Management
Real Property Management is a franchise organization owned by Property Management Business Solutions, LLC, a privately held corporation based in Utah. With over 30 years of industry expertise, Real Property Management offices provide full-service residential property management for thousands of investors and rental home owners from more than 300 independently owned and operated locations throughout the United States and Canada. For more information about Real Property Management or property management services, please visit the following link: www.rpmgreateratlanta.com.
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