2017-18 Arizona Property Management Trends to Be Aware Of
June 3, 2017
As we approach the halfway mark of the year, we have seen some interesting trends taking hold throughout the property management industry. Probably the single most important trends include Generation X renters looking to purchase their own homes while the Millennials want to venture out of mommy’s and daddy’s basement and rent their own place.
During the recession of 2008-10, Generation X Americans were forced into foreclosure and walked away from their dreams of home ownership. During that time, they saw their credit scores get devastated by this. Bankruptcies remain visible for 10 years while other bad credit actions or events remain for 7 years on a person’s FICO scores. So for those individuals whose credit scores tanked due to foreclosures and job loss, they are starting to see a light at the end of the credit tunnel.
Consequently, we are seeing increasingly more Generation X Americans becoming eligible for a home mortgage and attempting to regain their homeowner status. The MBA (Mortgage Bankers Association) recently stated that it is now much easier to obtain a home mortgage then it was at any time during the recession. Additionally, the Mortgage Credit Availability Index has been on the rise since early 2013. So what does this part of the equation mean for property investors and management companies?
First and foremost, it means that landlords will be in direct competition with property investors and the management companies that are handling their business affairs. However, it also means that the competition will include an ever increasing number of real estate agents and mortgage brokers. In the meantime, we are seeing increasing numbers of Millennials striking out on their own and could eventually account for 1 out of every 3 renters this year and next.
Ironically, many post-graduation Millennials are handicapped by a weakened job market as well as tens if not hundreds of thousands of dollars in student loans. With Gen X individuals moving toward home ownership and Millennials on the verge of entering the rental market, we’re likely to see a market that is more competitive for individual landlords. So, as a property investor, you should be concerned with upgrading your rentals and improving their curb appeal. That is one of the best ways to ensure that your property is tenant friendly.
Ironically and because many empty nesters and retirees are now looking to downgrade the costs and responsibilities involved with owning a home, the largest demographic of new renters will be Baby Boomers. Some may buy smaller homes in order to be closer to their family members. However, creative property management firms and rental real estate investors will be figuring out the best ways to market their rentals to that senior demographic.