As we approach the end of the year, it’s a natural time to take stock of where we’ve been and where we are headed. I don’t know too many people who are sorry to see 2020 go. But has 2020 been a disaster for single-family residential landlords?
If you’ve been reading my blog articles, you know that the answer to this question for Westchester County landlords is an emphatic “no.” In our corner of the world, several factors have converged to make our rental market healthy. But what about the rest of the country?
22 million people lost their jobs in March due to COVID lockdowns. Since then, only about 12 million of those folks have found new employment. Back in April and May, a significant number of residential landlords thought this job loss might translate into serious vacancy issues. To their relief, this has not happened.
Depending upon which survey you use, something like 3% of Americans have moved temporarily or permanently due to the pandemic. That nationwide number, however, hides a lot of pain. The moving rates are higher for Black, Asian and Hispanic households than they are for Whites. Younger people (ages 18 to 29) moved more than any other group. A moratorium on foreclosures also skewed this number, but to what degree is unknown.
What is undeniable is that the market for single-family home rentals is bullish nationwide. The Wall Street Journal reports that the rush for suburban housing has made single-family rental homes outside of city centers “pandemic-proof.” Rents are not only stable, they are rising. Home prices are rising too, which further fuels the rental housing surge.
Have residential landlords “dodged a bullet?” The consensus is yes, they have. While rental markets in major urban centers like Chicago and Los Angeles are struggling, the suburbs are flourishing. We see that here in Westchester County as the exodus out of New York City fuels rental demand across the board.
What’s the outlook for 2021?
When the eviction ban is lifted, either on January 1, 2021 or later (see my previous article on this topic), there will be some disruption nationwide in the rental markets. But for most single-family residential landlords this will be a non-issue, according to most experts.
Now that a COVID vaccine is a reality and nationwide distribution begins this week, I’m hopeful that this is indeed the beginning of the end of our pandemic nightmare. The first macro effect of inoculating the most vulnerable should be a decrease in hospitalization and death rates due to COVID. That should motivate political leaders to decrease business and travel restrictions, opening the doors for greater employment and, therefore, prosperity.
The supply of rental homes nationwide, and indeed here in Westchester, is tight. That means rents will likely increase in 2021. Housing prices will also likely rise. The downside for landlords is that if you’re looking to acquire a new property to rent, it might cost you more. Finding that super attractive “fix up and rent” deal will be more challenging in 2021.
Adam Haleck is President and CFO of Northpoint Asset Management in Salt Lake City, Utah. His company has 25 offices in 12 different states. He recently said this, “Gosh, if I had $1 for every client that wants to buy another rental property… They’re really scarce. I’ll say that maybe 5 years ago when a client property would flip, it would be sold to an owner that occupied it. Nowadays, it’s almost always sold to another investor, and most of the time, we’re able to retain management, which is kind of a nice thing.”
If you have a residential property in Westchester County that you are considering converting into a single-family rental, then this is probably the best time in the past decade to step into the market.
Are you retiring in 2021 and are looking to downsize? Rather than selling your home, have you considered renting it? It might be a very attractive option for you, providing a steady income stream along with valuation gains over the next decade. Maybe you recently inherited a home, and you don’t know if the right move is to sell it or rent it.
At Sterling Property Solutions, our team can answer all of your property management questions and address any challenges. Together, let’s form a plan for you to take full advantage of the current conditions and put in place a robust, long term program for your success. Please give us a ring at 914-355-3277 or send us an email at firstname.lastname@example.org.