There’s no doubt that today, across the nation, rental markets are dominating. Returns are higher than they’ve been in a while, and vacancy rates are down considerably. A lot of would-be homeowners – especially Millenials – are being priced out of homes due to rising home prices, which is why many have turned to renting instead.
As property management specialists, we’ve seen the strength of the Birmingham market grow over the past few years, ever since the recession started in 2008.
What qualities should a potential landlord look for when assessing the potential of a local market? What factors come into play when determining how strong a market is? Here are three factors that you should consider when evaluating a market.
Low Unemployment Rate One important factor is the area’s unemployment rate. Unemployment keeps people from buying homes, but it also impacts how much of a rental home they can afford, as well. The lower the unemployment rate, generally speaking, the higher your returns will be (all other things considered equal). Birmingham’s unemployment rate for June 2014 was 6.2 percent, which is lower than the 6.8 percent rate for the state. The rate was as low as 5.5 percent in May.
Favorable Demographics Another important factor is the composition of the people who live in the market. It’s no secret that Millenials are prime targets for renting. A wide range of factors – from the economy to pressing student loan debt – is keeping many in this generation from owning, so renting is the only real option. Another demographic that lends itself to renting is Baby Boomers, who are largely downsizing from homes they have owned and are electing to rent instead of pay more for smaller homes.
A Quickly-Growing Population Finally, an area with a population that is experiencing rapid growth is ideal for renters. These areas are ideal because rapid population growth means a lot of people are moving into the area, usually related to employment opportunities. Renting is the first course of action for most, and some choose to stay renters even after they’ve become settled in the area – especially with rising home prices. For this reason, many destinations in the South and Southwest have become prime rental markets. Several parts of the Birmingham metro area are experiencing solid growth. If you have any other questions about the Birmingham rental market, consult with the property management specialists at gkhouses.com.