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DS News September 2018

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56 RENTS ACCELERATE IN MAJOR METRO AREAS For many, the biggest barrier to homeowner- ship is saving for that hefty down payment. Rising rents exacerbate this situation. e pace of rental rate growth is higher this spring than last in about three-fourths of the major metros Zillow observes in its Zillow Real Estate Market Report. Rent growth accelerated in 27 of the 35 metros observed for the May report. At the national level, rents grew 2.1 percent over the year, reaching $1,440 per month. e steepest rent price accelerations over the year were recorded in Pittsburgh, Detroit, and Houston. In Pittsburgh, rents declined 5.20 percent over the year leading to May 2017 and then grew 1.9 percent from May 2017 to May 2018. Some slight relief came to some of the nation's most expensive rental markets, the report revealed. While rents here are still generally on the rise, the pace is slowing, according to Zillow. However, this comes as little relief for those aspiring homeowners trying to save for a down payment. "Even in markets where rent growth is slowing, high prices have already been established," Zillow stated. "With mortgage rates rising and mortgage affordability deteriorating, owning a home may start to feel out of reach for many Americans." In Seattle, rental rate appreciation decelerated from 5.8 percent over the year last spring to 3.3 percent this May. In Los Angeles, rental price growth slowed from a pace of 4.2 percent to 3.5 percent. In Port- land, rents slowed from 3.6 percent growth to 1.5 percent, and in Boston, rental price growth slowed from 3.2 percent to 1.2 percent. e good news, at least at the national level, is the 2.1 percent national rent price growth recorded over the year in May is "well within a long-term sustainable range," said Aaron Terrazas, Senior Economist at Zillow. Terrazas also mentioned that the markets that experienced the greatest deceleration in rent price growth were those that "moved most quickly to add units." Another factor making saving for a down payment harder is continued home price growth across the nation. Home prices are up 8 percent over the year in May, reaching $216,000, according to Zillow. e greatest home price appreciation among the nation's 35 largest metros took place in San Jose, California, where prices increased nearly 26 percent over the year. Las Vegas and Seattle also experienced steep inclines at 15.5 percent and 12 percent, respectively. Inventory, which can, of course, impact price growth, is on the decline. Zillow estimated that there were 5.3 percent fewer homes for sale this May than last May. Inventories dropped most drastically in Denver (-15 percent), Atlanta (-15 percent), and Pittsburgh (-13 percent). WHAT'S MOTIVATING INVESTMENT AND VACATION HOMEBUYERS? Location, purchase choices, as well as vaca- tion and investment plans rank as high priorities among homebuyers looking to purchase real es- tate as an investment or holiday home. According to a study released this summer by the National Association of Realtors, 72 percent of vacation property owners and 71 percent of investment property owners believed now is a good time to buy. When it came to utilizing their investments, 30 percent of those with vacation properties and 32 percent of those who had bought a home as an investment said that they planned to rent them in 2018, the NAR study revealed. e location was a top priority for both types of buyers with 34 percent of investors purchasing homes in a suburb, 24 percent in a small town, and 19 percent in an urban area, the report said. On the other hand, buyers who bought vacation homes preferred resort or rural areas. Around 33 percent of vacation buyers picked a beach area, while 21 percent preferred the lakefront, and 15 percent, the countryside. Single-family homes were also high on their preference list with 63 percent investors and 52 percent vacation buyers purchasing detached single-family properties. ey also preferred pay- ing in cash, the report found, with 42 percent of investors and 39 percent of vacation buyers paying all cash for their purchase. When it came to utilizing their properties, 49 percent of vacation homebuyers planned to use it as a family retreat, while 45 percent of investors purchased with the intent of generating income off their investment through renting the property. A much smaller number of vacation buyers, 6 per- cent, looked at buying their vacation home with the intent of generating income by renting it out. e study also found that 24 percent of those with investment properties rented it in 2017 as a short-term rental compared to 25 percent of vacation property owners. Looking at the future though, more people buying a vacation home are looking at renting it out in the short term with 30 percent of those with such properties saying they would rent them out in 2018, against 32 percent of owners who bought property as an investment. Smaller than some. Second to none. PROTECTING YOUR INTERESTS IS ALL WE DO. ALL DAY. EVERY DAY. Richard M. Squire & Associates, LLC (SquireLaw) represents a broad array of lenders and servicers effectively protecting their rights as creditors. SquireLaw is a one-stop, "cradle to grave" shop specializing in residential and commercial mortgage foreclosures, bankruptcies, ejectments (evictions), litigation of contested files, mobile home repossessions, land installment contract defaults, and REO closings. Serving: Pennsylvania and New Jersey Richard M. Squire & Associates, LLC One Jenkintown Station, 115 West Avenue, Suite 104 Jenkintown, PA 19046 (215)886-8790 rsquire@squirelaw.com jhess@squirelaw.com (Client Relations Representative)

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