As recently reported in RECON, an on line reporting firm for real estate professionals, a study by ATTOM Data Solutions 2019 Rental Affordability Report stated that for every $1,000 price increase of a home that 127,500 people are priced out of buying a home. The study compared wages to rent to obtain a percentage of wages towards rent and to buying a median priced home with a 3% down payment. They then added in property taxes, property insurance, and private mortgage insurance which is required by most lenders for folks not having a 20% down payment. I note that it is interesting that they didn’t calculate any repair or maintenance costs which I do when analyzing an investment property. Could they possibly think that a home is maintenance free?!
Over 71% of the 45 Texas counties surveyed (Texas has 254 counties) were found to be more affordable to rent than to buy. In our area that included Travis county (Austin, Pflugerville, Oak Hill), Williamson county (Round Rock, Georgetown, Leander, Cedar Park), and Hays County (Kyle and Buda).
The study reported that affordable housing (especially in our area) is becoming scarce because of many reasons:
- Dwindling number of affordable lots
- Increase in building materials
- Increased labor costs
- Increasing property taxes (I added this one)
So what does this mean for us residential real estate investors in our local area? It means that you have a potential gold mine. If it is cheaper to rent than to buy, why buy (even if you could)? With Apple adding 5,000 additional jobs to our local area that will spin off even more jobs and that means more potential renters for our properties.
Not to mention that this week a local economic forecaster this week stated that Austin will reach a population of 1,000,000 in 2020.
All these folks have to live somewhere and in something and that folks is our gold mine.
Rick Ebert / Austin, Texas / 10 January 19