SECURE YOUR FUTURE THROUGH HOMEOWNERSHIP
FACTS ABOUT RENTING
There are three ways to satisfy the need for housing. People can live with family members or friends that provide housing for them at little or no cost to them. People can rent a house or people can buy a house. There are no other ways to keep a roof overhead. Everyone must pursue one of the above options. Renting is an increasingly unstable housing decision. Rent is rising. The median rental rate for single-family housing in Davenport and Clermont has increased by thirty percent, 2015 compared to 2016, according to My Florida Regional Multiple Listing Service, the portal in which real estate brokers market their properties and record housing data.
In years past Clermont, Davenport and Kissimmee had an excessive number of properties available for rent. Over the years, many people from around the world purchased second homes in the Walt Disney World area. Eventually, many of these second homes, which were originally rented in short term, weekly, vacation rental programs) transitioned to long-term rental properties. These properties oversupplied the housing market keeping rental rates low. Second home purchases in the Four Corners area have declined.
THE LANDLORD DECISIONS
Due to increases in housing prices and the strengthening U.S. dollar against foreign currencies, second homeowners who have been renting their properties to long-term tenants are now selling. When Landlords decide to sell their properties tenants must move. They have no choice. Another effect of Landlords selling their properties is that the supply of properties available for rent declines. The inventory of rental properties is shrinking. This decline in the availability of rental properties, and the increasing number of households choosing the rental option, results in a seller’s market. Landlords have the competitive advantage when there are more people trying to rent than there are properties available for rent. Increasing demand for rental properties and shrinking rental property inventory is causing rental rates to rise. Statistical evidence indicates that this trend will continue. The primary point here is that rental rates are rising and will remain high.
Another phenomenon that makes renting a less than optimal housing decision is the fact that the Landlord determine tenants’ housing destiny. Residential leases in Florida are typically one-year agreements. The housing expense is already consuming a large percentage of household income. When Landlords choose to raise the rent the tenant is put in a difficult situation. The tenant must choose between rising rent or moving. Even when tenants choose to move, finding a replacement property at a price that is lower than the Landlord’s proposed rental rate is unlikely.
Moving is expensive and inconvenient. Moving disrupts the family unit and often displaces children from their schools, resulting in less than optimal scholastic performance. Education is critical to children’s futures. A stable home environment is important for the development of children. Additionally, the distraction of moving can cause tenants’ job performance to suffer creating stress around the tenant’s employment situation. The Landlord sets the terms of the tenant’s housing experience. The only way for a tenant to take control of its housing situation is to buy a house.
Written by Mike Levine, Century 21 World Properties’ Broker and Owner. Part 2 of 3. Contact Mike Levine.