What breaks first - rentals or mortgages
I live in the Frisco area. Renting a house is about 30% cheaper in this area compared to buying at current interest rates. So it would be logical to assume more people will rent than buy. But then, rent itself is high enough that a household making less than 100k cannot afford to live in a 2/2 apartment or 3/2 home. If income is less than 100k, their percentage of income towards housing will end up being greater than 30%
Sooner or later something gotta give… which one is it?
#2 Real Estate Agent Contributor
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- Coppell, TX
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#2 Real Estate Agent Contributor
- Real Estate Broker
- Coppell, TX
So many old homeowners turned investors in Frisco has severely driven down rental rates. Returns don't make sense. People with means will probably buy vs rent at some point...paying $2500-$3500/month on rent with zero to show for it, probably doesn't make sense for most high income workers. These older homes with no maintenance and very little make ready that were originally built very cheaply will be one day hard to sell for many of those investors...especially after many hard living renters have been in them. If there will be a crash in prices, it will mostly like be in these Frisco and Mckinney area homes in my opinion. I'm also starting to see multiple family members or 4-5 guy tech workers wanting to rent some of these houses to combine incomes and lower rent. While it gets someone in the house, it will not probably be good for the investor over the long run. Get 5 single guys living in a house, no one cleans, no one takes care of the yard, no one wants to pay for watering the yard....they'll get foundation issues...they'll get to where the owners won't want to maintain or clean them up....and they'll sell at year 2000 prices.
There were also issues with new builds, long waiting lists, not signing contracts, labor and supply constraints...and that backlog seems to have evaporated.....builders begging for business now. So buyers will get back to the ....why should I buy your old used house that is well worn and not maintained, vs I can spend a bit more for a brand new house...and those older rental homes will suffer.
