Property Management – Woodland Hills
Woodland Hills Property Management
Property Ownership and Property Management Outlook 2014
The year 2013 will go down in the record books as a good year for both owners and managers of residential income properties.
As I wrote recently in an article titled, It’s Tough to Afford to be a Renter These Days, “Housing affordability doesn’t look too promising as 2014 begins. If you listen to the National Association of Realtors the opportunity to be a homeowner hasn’t been this affordable in a long time.”
If you’re looking to sell a home, 2014 may be a good year though probably not as good as 2013. But if you’re looking to buy, 2014 will likely be a better year than 2013.
These are just some of the expectations that Jonathan Miller president and CEO of Miller Samuel, a real estate appraisal and consulting firm, shared with The Daily Ticker at Yahoo.com.
“Take home prices, which have been rising at a rate of 10%-12% — depending on which data you use, for example.” Miller says home prices will rise half as much in 2014 because more supply will come on to the market. “Inventory is now below the usual six-month average, credit remains tight and unemployment and underemployment will remain high even if they’ve declined over the past year.
“How can we have price growth that we didn’t see in decades? It doesn’t make any sense,” Miller explains in the video above. About 40% of Americans have low or negative equity in their homes, says Miller. “They can’t trade up, make a lateral move [or} downsize, so they sit.”
And those who have the resources and good credit to buy will find that mortgage rates are higher. This is mostly due to the Fed’s recent decision to reduce its purchases of Treasuries and mortgage-backed- securities (MBS). As I’ve stated many time before, qualifying for a new loan is and will continue be harder than in recent years.
“Under the Dodd-Frank financial reform law, lenders are required to meet new underwriting standards for “qualified mortgages” (QM) if they want greater protection from lawsuits. A QM loan must have a regular schedule for payment of principal and interest and fees paid by the borrower can’t exceed 3% of the loan amount and monthly payments can’t exceed 43% of the borrower’s gross income” Miller explained.
The new rules “will continue to slow the momentum of improvement” in the housing market, says Miller. They will “bog things down for the first half of the year…an adjustment period [for rules] that is “probably a necessary evil.” The hope, of course, is that the new regulations will help protect the financial system from a crisis like the one in 2007-2008.
“These new rules will also impact Fannie Mae (FNMA) and Freddie Mac (FMCC) — the government sponsored enterprises that are still the backbone of the mortgage market. They buy about two-thirds of new mortgages and bundle them into mortgage-backed securities for sale in the secondary market. Fannie & Freddie will buy only mortgages that meet most of the QM criteria.
In addition, Fannie and Freddie are raising the fees they charge mortgage lenders in exchange for guaranteeing new loans. The increase will make Fannie & Freddie-backed loans more expensive, which will create more opportunities for private companies to compete in the same mortgage market, says Miller. That’s “taking our medicine,” says Miller.
So 2014 looks like a more challenging year for both property owners and managers, but don’t let that worry you. The flip side and the silver-lining is that owners who have invested in areas where vacancy rates are low will still find plenty of desperate renters wanting to become residents.
For property managers, whether your region has an abundance of potential renters or a deficit, if you’re a smart competitor with the latest and best technology, software and marketing strategies, you’ll outshine your competition.
Being a big proponent of cooperation versus competition, I’d recommend that property managers network with their peers to learn what’s working and how to cooperate your way to success. If you help your competition by referring business to them they’ll do the same for you. Why? Sooner or later you’ll find a prospect who wants to rent in an area where you have nothing available.
When the opposite is true, you’ll find your property management competitor will refer prospect to you. Start 2014 with a winning, cooperative attitude and it could be one of your best years yet.
