A glut of rental homes in Chesterfield County is good news for tenants, but not so much for property owners.
An article in the latest Chesterfield Observer sheds some light on the rental market south of the river, and it isn’t pretty. Unable to sell their houses, more and more property owners have turned to renting them out. But the volume of rental homes on the market have brought down rental rates—in some cases below the amount needed to cover the owner’s mortgage payment.
From the story:
“We’re picking up a lot of our properties from the glut of homes that aren’t selling,” says Carole Terhune, rental manager for Charles A. Rose Co. real estate company, which manages single-family homes throughout Greater Richmond, including Chesterfield. “The owners have tried to sell their home for the last year, and it isn’t moving, and they’ve got to do something to cover their mortgage. So, they turn to property managers so they can at least get something back.”
Terhune says current rental rates may not even cover the mortgage of some homes under her management, a situation Horner has seen result in unfortunate outcomes for homeowners and renters alike.
“I [recently] showed a house to a couple that is currently renting from an owner, and they’ve been paying their rent every month, but the owner has fallen behind on his mortgage payment,” says Horner. “The home is going into foreclosure, so they as tenants have to move because the owner is losing the property. That’s happened twice this week. We’re seeing more and more of that.”
A glut of rental homes in Chesterfield County is good news for tenants, but not so much for property owners.
An article in the latest Chesterfield Observer sheds some light on the rental market south of the river, and it isn’t pretty. Unable to sell their houses, more and more property owners have turned to renting them out. But the volume of rental homes on the market have brought down rental rates—in some cases below the amount needed to cover the owner’s mortgage payment.
From the story:
“We’re picking up a lot of our properties from the glut of homes that aren’t selling,” says Carole Terhune, rental manager for Charles A. Rose Co. real estate company, which manages single-family homes throughout Greater Richmond, including Chesterfield. “The owners have tried to sell their home for the last year, and it isn’t moving, and they’ve got to do something to cover their mortgage. So, they turn to property managers so they can at least get something back.”
Terhune says current rental rates may not even cover the mortgage of some homes under her management, a situation Horner has seen result in unfortunate outcomes for homeowners and renters alike.
“I [recently] showed a house to a couple that is currently renting from an owner, and they’ve been paying their rent every month, but the owner has fallen behind on his mortgage payment,” says Horner. “The home is going into foreclosure, so they as tenants have to move because the owner is losing the property. That’s happened twice this week. We’re seeing more and more of that.”
Its going to keep happening too. And then most “accidental” landlords will end up going into foreclosure.
The end will be when the excesses of the bubble wear off, and house prices return to levels supported by fundamentals. Which is to say a fair bit lower than now
Yet ask any residential agent and they all say the same thing: “now is the time to buy!/the market is turning around!” Get real, the housing market won’t recover until U6 starts printing sub 10% again. We have been at or near 17% for a year and a half now, this why every analyst worth his salt cracks up every time those fools from the NAR go on CNBC blowing smoke.
First, renting a house that you can’t sell is an excellent option for property owners. Much better than foreclosure. Short Sale is another good option that is becoming easier to navigate, but it does have some credit consequences. We have over 300 properties under management in our single family division, right now, that are generally very happy with renting their homes. The expenses are tax deductible and home prices will appreciate in the next 2-5 years most likely. Just as prices don’t always go up forever, they also don’t go down forever! Second, now is great time to buy! Remember… Read more »
I live in one of those communities [The Highlands] and on my street alone, five of eight houses have been on the market, in one way or another, for more than 3+ years. “Asking prices” have fallen from 10% below assessed values to 30% below assessed values with still no interest. And, at those prices, who can afford to engage an Agent with their 6% “fixed” price? [In other parts of the country, sales commissions are negotiable.] Of course, Chesterfield County insists their “assessed values” are right … that they’ve only fallen 10% over those three years. Figures massaged by… Read more »
There’s a strong argument to be made that now really is a great time to buy for those who will finance much of the purchase. Interest rates are historically low, and that greatly affects how much one will pay for the home over time. 160,000 financed over 30 years at 5% produces a payment of $859 before taxes and insurance. 130,000 financed over 30 years at 7% produces a payment of $864 before taxes and insurance. For those who are rightfully cautious to jump into the mortgage pool, realize that rising interest rates will greatly offset any money saved by… Read more »
Leasing is an attractive option for many owners who are unable to sell, or are waiting out the depressed real estate market. Yes, the rental market is saturated with resales that won’t sell but a well maintained, properly price house will lease sooner than later. While we can’t always get an owner a break even or positive cash flow position on their monthly debt service, we can provide them with mortgage relief, thereby staving off a short sale or foreclosure situation. Historic low rates and super low sales prices make this is a great time to invest in real estate.… Read more »
In response to Carter Snipes, you are a Realtor with your head stuck in the sand, just trying to put a good spin on the real estate market so you can make some money. Truth is : the market values need to go down – way down in some areas of Richmond before the economy as a whole improves in our area. The county and city governments are not willing to decrease the property values because they will lose a huge chunk of revenue. The problem is that if the housing market (the values) of the homes do not decrease… Read more »
With all due respect Lisa, if you think that real estate is the best investment opportunity out there your idea of an acceptable return is much more conservative than most. The Case-Shiller suggests that the average homeowner can expect an appreciation of 3.5%/year over the long term. Considering that historic inflation since 1913 has averaged 3.43%/year, investing in an average house in an average market would mean you are building real wealth at the rate of 0.07% a year. Of course, this doesn’t even take into account that most Americans finance this “investment” with a mortgage. Don’t get me wrong,… Read more »
An economist friend of mine who recently bought a home always chafes when he sees the purchase of a home confused with an investment. Surely you are investing much of your time, money, and life into the purchase of a home. But it is not an investment in the traditional sense, and as Kevin Anderson rightly points out it is often a losing proposition compared to, say, simply purchasing stock in Dominion Power (which pays a steady quarterly dividend even in this economy). Having said all that, I stick by my assertion that it is a great time to buy… Read more »