In this issue:
- August sales and lease data from HAR
- Another month, another eviction moratorium
- Getting closer to normal?
On a monthly basis I spend time researching topics I know are of interest to the property investor community. The last couple months I’ve wondered if I’ll have enough valuable info to share, and then something crazy occurs like the CDC of all entities being the one to come out with an eviction moratorium! More on that to come. With election season in full swing, I now know my challenge will be narrowing down the noise. I’ll do my best for you as always, here’s what I’ve got for you this month.
August HAR Release – https://www.har.com/content/newsroom?pid=1735
The headline is that August posted the third consecutive month of sales increases year over year. August showed a 6.0% increase in sales overall year over year, with homes priced above $500,000 showing more than a 30% increase year over year. Looking into the details a little more though, what most people would consider the rental home market did not perform as well. By segment:
- $1 – $99,999: decreased 34.2 percent
- $100,000 – $149,999: decreased 31.4 percent
- $150,000 – $249,999: decreased 4.4 percent
Affordable housing is on the decline. Significantly if looking at homes priced less than $150,000. Inventory overall in the greater Houston area is down to 2.8 months of supply, the lowest it has been since April 2015!
Leases also dropped in August with single family homes seeing a 13.3% decline in new leases year over year and townhomes/condos seeing a decline of 13.7%.
I won’t go into the implications of affordable housing becoming harder and harder for lower to middle income families to obtain. But, I did personally find it surprising to see such a decline in this segment while we still have record low interest rates. Could be there just aren’t many homes for sale, could be investors are not as active with the uncertainty in the economy, and could be this socioeconomic class is having an even harder time buying than before. Certainly something to watch as an investor.
The CDC Issues an Eviction Moratorium
The Trump Administration teamed up with the Centers for Disease Control and Prevention to issue an unprecedented eviction moratorium that went into effect on September 4. For an expanded read on this – https://fortune.com/2020/09/03/trump-evictions-halt-who-is-eligible-landlords-when-rent-due/.
Long story short, this latest eviction ruling expands protection to residents in all houses, regardless if the home has a government backed mortgage or not. The important factor here is that the onus is on the resident to show they have used “best efforts” to obtain government assistance and that eviction would make them either homeless or forced to live in a shared living situation (amongst other requirements).
At our property management company, we have one resident in the eviction process right now. We have had to sign new paperwork stating that we have not received any notices from the tenant that he/she could be in this situation, nor do we believe that to be the case. I believe we’ll have a successful outcome for our property owner, but a savvy tenant could certainly take advantage of this situation and delay the inevitable. The ruling right now is set to expire December 31, 2020.
A little over a month ago, our broker and attorney David Schein actually predicts that the government would come out with a new moratorium. Check out that video here – https://themanagementpros.com/july-market-update-you-have-written-a-book-about-the-performance-of-us-presidents-not-asking-you-to-fully-evaluate-trump-yet-but-do-you-think-well-see-policies-enacted-in-the-4-months-leading-up/
Getting Closer to Normal?
I saw a great headline last week – “Football Saves America”. The article went on to explain how of course football won’t at all cure COVID or unrest over racial injustice or any other major issues. But, it made a very fair point in that it was great to see something that was mostly normal. There weren’t crowds, there were political statements, but for the most part it was about football. In the great state of Texas, this is no small deal. Football here is not a sport, it’s a way of life. So, seeing college football on Saturday and pro football on Sunday, at the normal time slots, was a very welcome relief in a world where almost nothing feels normal.
We have a very very long way to go, but I welcome every step that gets us closer. Regardless if you like football, I’m sure we can all agree to that. Until next time, stay healthy. And if you want to enjoy the escape of sports for just a little bit, go for it.