How the Housing Market Affects Your Rentals

The housing market impacts homeowners, but how does it impact you and your rental properties? Unfortunately, there is not a clean cut answer simply because the impact on your properties depends on how the housing market is doing.

 

Sellers’ Market: When Housing Prices are Up

When housing prices are up, sellers have the advantage. They can get the most money for their property – if it sells. During this time, there are many people who want houses, but most of them do not have the credit or ability to buy a house at its prime rate. Therefore, these parties turn to rentals. This means you will have more individuals interested in your property and thus less worry about your properties sitting vacant. This also means that you will be able to increase the market rent on your property to get a higher rate, which is a good return for you.

 

Buyer’s Market: When Housing Prices are Down

When the market turns in the opposite direction and housing prices go down, more buyers enter the market and take advantage of the low prices. That means you will have less interested tenants and, in some cases, tenants putting in their notices in order to move out and into a purchased home. Unfortunately, if you have to rent any vacant properties during this time, your market rent will be considerably lower than it is during a Seller’s Market phase.

 

The housing market may not impact you in the same way it does those buying/selling, but it impacts your tenant availability, rental rates and overall profits. Therefore, just like any homeowner, you need to be conscious of how the market is doing and prepare for how it will affect you.

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