How it effects residential and commercial property management
In recent blog post it has been mentioned that increased home foreclosures may have a negative correlation with rising rent trends in certain neighborhoods. One explanation for this relationship may be that increased foreclosures leads to more supply in the home rental and buying market which puts pressure on rental price. Another explanation is that increased foreclosures in a neighborhood may make that neighborhood less desirable decreases demand.
It is therefore important for rental property owners and managers to be aware of the foreclosure market in their area so that they can potentially predict future supply and demand and consequently future rental prices.
According to RealTrac the states with the highest Foreclosures rates are Florida (1 in 434 homes), New Jersey (1 in every 511 homes), Maryland (1 in every 673 homes), Illinois (1 in every 789 homes) and Nevada (1 in every 797 homes). It is interesting to note that 6 months about these same states also had the highest foreclosure rates. In May 2014 the rankings for highest states with foreclosures in the country were Florida (1 in 129 homes), Maryland (1 in every 189 homes), Nevada (1 in every 224 homes), Illinois (1 in every 230 homes) and New Jersey (1 in every 273 homes).
In addition, according to RealTrac homes in the 100k-200k price range are the most likely to be in some level of foreclosure (285,717 properties) and homes less than 100k are the second most likely to be in some level of foreclosure (close to 200,000 properties). According to these numbers it is likely that overall rental prices in Florida, New Jersey, Maryland, Illinois and Nevada will rise slower in comparison to other states. In addition, this affect may be concentrated in areas with homes worth less than 200k as they are the most likely to be in some level of foreclosure.
This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.