Real estate continues to be a hot topic in America. Over the past few years, market and economic fluctuations have created big changes for real estate investors, owners and occupants. As we move further into 2023, it’s become increasingly clear there’s ample opportunity in the real estate industry—particularly in the property management space.
In today’s economy, three major drivers are signaling opportunity for professional property managers. Right now is a great time for real estate-savvy entrepreneurs to get into the property management business and take advantage of today’s homeownership and rental industries.
High mortgage rates have slowed home purchases
The homeownership market was extremely hot from late 2021 to mid-2022. To cool inflation, the Fed imposed a series of interest rate increases through the end of last year—and more may be in store. This caused mortgage rates to increase at the fastest rate since the 1980s.
As a result, home sales have slowed down significantly compared to previous years. Last fall, Freddie Mac projected home sales to be lower in 2023 than in 2022 and in 2021, dropping from nearly 7 million sales in 2021 to around 5 million in 2023. Because of those higher rates, homeownership isn’t as attainable, and fewer people are buying.
Slower home sales might lead to property management opportunity in a few ways. First, homes are now taking longer to sell on the market. Instead of selling, owners may choose to turn their existing properties into passive income streams by renting them out. Inexperienced property owners could use the help of knowledgeable property managers to lease and maintain their homes for the foreseeable future.
Additionally, people still need a place to live, even if they’re unable to purchase a home. Instead of buying, more households are turning to rental units in the current economy. This may lead to greater rental demand. Property owners will rely on experienced managers to find valuable tenants.
Rental demand results in high rental rates
The rental market itself has been booming over the past year, as well. High rental demand has resulted in high rental rates across the country. In 2021, the median rent went up by almost 18%, and it went up a further 10% in 2022. These high rates mean landlords can make even more from their rental properties.
Although rental prices are cooling somewhat, experts believe the median rental will increase by 6.3% in 2023. Considering that 35% of American households rent their home, there’s tremendous gains to be realized in the rental market. Homeowners are incentivized to take advantage of rental demand by renting out second homes or investment properties.
However, high rental rates may also pose financial challenges for lower-income renters. There’s the potential for high tenant turnover in rental properties due to job loss, tight budgets and the search for cheaper housing. The need for reliable tenants and easy, fast lease-up is high. Property owners will need the help of management partners to find reliable, long-term tenants and maximize their ROI with market-appropriate rents.
New property owners need help in the market
Economic conditions from the past few years have also influenced today’s real estate market. More people are turning to real estate as a wealth-generation vehicle. Millions of homes were purchased in 2021 and 2022 when mortgage rates were at historic lows, and many of those homes were intended to be investment properties.
These new owners may not have much experience in managing residential properties, though. Inexperienced property owners need professional management assistance to navigate the market and ensure their new investments become lucrative assets. Property management services like Keyrenter are in the perfect position to assist these new owners in leasing and keeping up their rental properties.
Now is the time to join the property management industry
The growth in the residential investment property and rental markets is undeniable. Current economic conditions have set the stage for high rental demand and attraction to residential homes as an investment vehicle. The best way for owners to convert their properties into passive income streams is to rely on the expertise of a professional property management service like Keyrenter Property Management. We leverage a comprehensive suite of automated systems and technology to make managing residential properties easier, simpler and stress-free.
Whether you have real estate experience or are simply interested in the industry, don’t miss your chance to capitalize on the current market’s extraordinary opportunities. Investing in a Keyrenter franchise allows you to build a portfolio of local residential properties and help owners and renters in your region! Contact us to learn more about our exciting franchise opportunity.