A while back we wrote about changes in the real estate market brought about by the Chinese flu and the government reaction to it. There are many negative impacts on individuals and businesses, but today we will look at the changes in single family housing that are taking place already.
We noted then that many people were working from home instead of commuting to an urban cube farm. Unless they were already doing a significant amount of work at home, most of these newly confined employees find themselves working from makeshift offices in the corner of a bedroom, dining room, garage or wherever they can find some space and an internet connection.
Another Curve Ball for Construction
Because they are still working with the middle class market, not looking for a McMansion and not being able to afford one anyway, they are trying not to bump the price up too much. One builder working in the new construction for rental market recently explained that they were trying to rework their current designs to carve out that extra room with the same footprint – thus minimizing the price impact.
This may mean pulling back from the open concept designs and smaller rooms to avoid adding square feet and pushing the price of the home further out of the reach of many of the people they are building for.
Why Build For Rentals?
Some new developments of single family homes are actually being created for the rental market. A significant segment of this market is occupied by the much maligned millennials. There are many who have not been damaged too severely by their education are working at pursuing the American dream – however they define it.
Many have saddled themselves with excessive college borrowing. Even though some make pretty good income, the education debt stands in the way of a reasonable home loan, or even an unreasonable one. This is one reason many would like to palm their debt off onto the unsuspecting tax payers who have plenty of their own debt to deal with. Because of this, some builders are working to build rentals that provide nice housing at a rental level the market can handle.
Impact on Investors
Many investors working in this same market may well find themselves looking at similar demands from their tenants. When you get into the family market many here are also looking for and extra bedroom or office. Most of the time, expanding the footprint of the home is neither practical or economical. Here is where some creativity will come into play in meeting this demands of the market.
Investors and rehabbers are usually flexible and creative people able to find ways to turn a property into something people will either want to buy or rent. Being aware of this trend will help meet the needs of the market and the profitability of the investor.