Rent or Own:
The U.S. Census reported a 31% growth in single-family rentals from 2007 – 2016. It was during this time that large real estate investment companies bought many single-family foreclosure homes that were then turned into rentals. Most are still used as rentals.
Now,Best in American Living reports that renting single-family homes is gaining in popularity, particularly among millennials who are experiencing “major life changes, like marriage, children and advancing careers.” The post goes on to talk about single-family rental home developments and the advantages of renting rather than owning. Developing whole neighborhoods of sing-family rental homes.
Just shortly before that article, Florida Realtors®“The Voice for Real Estate in Florida,” advanced a poll by Bankrate.com that found real estate to be “Americans’ preferred long-term investment.” Interestingly, the study found millennials prefer real estate “more than any other generation (36%).”
So, what gives … rent or own?
I can imagine some Millennials asking, “why can’t I have my cake and eat it to?” And, they might do just that. Who’s to say what the wonderful world of PropTech will drum up, as it begins to envelop the real estate industry. Afterall, there’s billons flowing into it.Google defines PropTech or property technology as “the use of information technology (IT) to help individuals and companies research, buy, sell and manage real estate. Similar to the way FinTech focuses on the use of technology in finance, PropTech uses digital innovation to address the needs of the property industry.”
Millennials know applications, when they see a problem, they look for an app to assist with it. And, collaboration has become their preferred way to do business. Together they see things through eyes mostly untethered of boundaries. And, with real estate as their favorite long-term investment. Their eyes are focused on correcting the problems of the industry. Eric Trabold of Nexkey says “I believe the next frontier is to streamline optimization of operating real estate with the latest technological advancements in the internet of things, sensors, big data and artificial intelligence (AI).”
Eric looks at proptech from a property management prospective, but it touches all aspects of real estate. And, I believe if the economy holds strong and regulations are updated and loosened to allow it, many of the pain points associated with real estate will be alleviated. And for many, the first step into the real estate market, that of buying a home, is the pain that’s hardest to overcome. There are many organizations and entrepreneurs working on this most pressing need of affordable and workforce housing. And, much headway is being made.
With the streamlining of proptech, rent to own could become more popular.
The pathway for tenants to homeownership clearer. What will be the pattern? I don’t know. Perhaps, a developer/investor forming alliances with home warranty companies, an AIO (All in One) lender, a large property management company, ibuyers and, who knows … Airbnb? Sound farfetched? Maybe, but proptech is bringing many parties together and challenging the way everything is being done today. There are many aspects to the real estate market, and the cost and value of real estate, comes from a variety of directions. As each of these facets converge in proptech, there are bound to be hybrid solutions to today’s problems.
So, what does this mean for us today? It gives us more reasons to stay abreast of innovation and to do business with those who are keeping up to date. Many of the problems that once dogged property managers are being resolved or managed better. It means that affordability and ease of use are the driving forces behind much of the innovation. It’s what we need to keep in mind in our business dealings. Of course, the cost of new construction is what places the upper limit on the prices of resales. Thus, if innovation spurs lower cost in new construction then values for resales will be lower. If these innovators are successful, new construction may not be headed higher for much longer. So be smart in your real estate purchases.
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