Is there a Rental Crisis in the US?  It depends on how you look at it!

In this episode I look at the U.S. rental "crisis" and what it means for tenants and landlords.  What are the trends?  Are opportunities getting better or worse?  Where do we go from here?

Whether you're starting out, or a seasoned real estate investor, this is a question worth investigating.

If you missed our last episode, be sure to listen to How to Self-Manage Your Properties.

Enjoy the show!

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Rental Crisis in the US?
I want to begin by thanking all of you for making the show the success it is. We're now heard in 110 countries around the world. That is just mindboggling that we can actually have that much of a reach. I want to mix up the topics a little bit. Sometimes, we're going to talk about housing. Sometimes, we're going to talk about economics. Sometimes, we're going to talk about tactics such as asset protection or maybe tax strategies or market spotlights. Today, I want to talk about the so-called rental crisis. Do we have a rental crisis here in the United States? It depends on how you look at it. What side of the equation are you on? For most of us, at least the people listening to this show, it might be a huge benefit because we are effectively real estate investors and landlords. Our service is to provide tenants who need housing with clean, safe, and affordable housing that they can live in and be happy and pay their monthly rent. That rent pays off our mortgage and our expenses and hopefully there's some left over at the end of the month, which becomes positive cashflow for us. That pool of tenants has been increasing quite rapidly over the years.

Rental Crisis: Today, we're at a situation where home ownership in the US is at a 48-year low.

Today, we're at a situation where home ownership in the US is at a 48-year low. It's the lowest since 1967. That trend is continuing. Even though the government has tried to step in and interject with introducing more lenient qualification criteria in terms of mortgage financing, I don't think that's going to stand the tide. This is a trend that's going to continue for years to come. The other issue too is that we're seeing real incomes declining. In other words, for a long time now, real income has declined in terms of real numbers. In other words, when you adjust for inflation, people's income year-over-year has actually declined or stayed flat. It hasn't increased like the media has led us to believe.

In regards to home ownership, the problem is that fewer and fewer households can afford to buy a house. Even with these low interest rates, there are more and more people renting than buying today and that's by choice or by necessity. This increased rental pool has caused increased demand and that increased demand has pushed rents through the roof. That's one of the effects that we're seeing. The nation's home ownership rate does continue to decline and I foresee that to continue for years to come. It peaked at 69 .2% to be specific, back in 2004. Today, we see it 63.4%, that's a huge drop. For every percentage decrease in that home ownership rate, we're seeing somewhere in the neighborhood of probably a million new people coming into the rental pool. That's a huge number. They need to live somewhere. That's where we hopefully step in as real estate investors, to provide them clean and affordable housing.

What happened? This started off with tighter mortgage standards. Now we're seeing multiple credit checks, owner’s income and assets verification, these are headaches, higher credit score requirements and lower debt-to-income rati...