MARKET & TRENDS
LOCAL MARKET MONITOR
Evaluate your Rental Investments in Uncertain Times AS UNCERTAINTY LOOMS, CONSIDER A ‘DEFENSIVE’ STRATEGY.
HOME PRICE TO RENT RATIO
LOCAL MARKET MONITOR
2018 JOB GROWTH 2018 HOME PRICES
HOME PRICE (000)
MONTHLY RENT
15
2.5%
5%
$172
$958
Lubbock, TX
16
2.0%
11%
$173
$890
Killeen-Temple, TX
by Ingo Winzer
16
1.9%
7%
$167
$858
Lansing, MI
ith government shutdowns, shifting mortgage rates and cooling home prices, 2019 is poised to be a year of uncertainty. And for real estate investors facing an unpredictable market, a defensive investment strategy can serve you well. What that means is staying away from booming markets in California, Florida and Las Vegas — many of which are starting to slow down at faster rates than anywhere else in the nation. By the time you realize a boom market has peaked, it's usually too late to get out. As such, this year isn’t the best time to jump into one. I think prices will continue to rise in these markets for another couple of years, but I'm far from sure about that. Another strategy in uncertain W
times is to give yourself maximum flexibility, which is why single-family rentals are attractive. If the rental stream you expect doesn't material- ize, you can always sell back into the single-family market. This month, we've listed 15 markets where single-family rentals have good opportunities for in- vestment. First of all, note that the economy in each market is doing better than the nation as a whole, where jobs are growing at a 1.6 percent rate. Next, note that the markets’ home prices in the past year increased in the 5 to 11 per- cent range. This indicates a healthy demand not only for single-family homes but for rentals as well. Also, look at the ratio of home prices to annual rent from 15 to 18. That means you can rent out a
property without having to split it into multiple units. Protect yourself by buying a property you can rent into the “Target Rent Range,” which is the average rent rate to about 25 percent higher. That's where you'll find the largest concentration of renters. The table shows markets that have, in general, been down for a while but now look a lot better. This year they may be your steadiest bet. •
17
1.9%
6%
$211
$1,042
Allentown-Bethlehem, PA
17
3.8%
11%
$176
$863
Ocala, FL
17
2.0%
6%
$203
$971
Bakersfield, CA
17
1.8%
5%
$210
$1,006
Lancaster, PA
17
2.2%
6%
$190
$907
Memphis, TN
18
2.9%
5%
$176
$832
Tulsa, OK
18
3.8%
9%
$197
$930
Lakeland, FL
18
2.0%
10%
$225
$1,050
Deltona, Daytona Beach, FL
IngoWinzer is president of Local Market Monitor, which analyzes conditions in 300 U.S. markets, using such economic data as home values and growth in employment and population. Winzer, who has analyzed
18
2.5%
5%
$176
$808
Cleveland, OH
18
2.1%
5%
$192
$874
Augusta, GA
real estate markets for more than 20 years, was a founder and executive vice president of First Research, an industry research company that was acquired by Dun & Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in finance from Boston Univer- sity. Winzer resides in Cambridge, Mass. www.localmarketmonitor.com.
18
2.3%
6%
$220
$998
Tallahassee, FL
18
2.1%
7%
$204
$921
Omaha, NE
Source :: Local Market Monitor, 2019
94 | think realty magazine :: march / april 2019
thinkrealty . com | 95
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