Monday, July 2, 2012

Another article about more renters, but what can we expect for the future?

Our affiliate Southwest Montana Properties posted this recent article:

5.1 million more Americans are renters

So here again, another article about the tremendous gain in renters in recent years. We have to be cautious about any trend as they will always end. Just as we found out about the stock market crash of 2000, the real estate crash of 2007/2008, what can we expect of this one?

Well, the interesting part with multi families is that they are recession proof which is what this article is somewhat proving. But they are also at the forefront of the commercial real estate wave when things picks up. Wren Investment Group do not believe we are out of the recession, in fact, we believe this will later be called the great depression II or some equivalent name when all is said and done.

So what does that mean for apartment properties? We expect more families having to downsizes into more economically efficient lodging which translate to a move away from single family homes towards apartment properties. In other words, less owners, more renters in a time of rising inflation and difficult economic time. Sure, more single family homes will also be offered for rental as well, and so will duplex.

But what if we are wrong and the economy picks up and new jobs appears on the market? Well, then at first, the guy who was living with his brother or sister or parents will be able to move out and rent an apartment so he can have his own place. He will rent and build up saving so he can buy his own property later. So it will take some times after the economy picks up for the ownership to come back in the trend.

So in essence, the next few years for commercial apartment properties: heads they win, tails they win.

-Phil Champagne,
Managing Partner, Wren Investment Group, LLC

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