In the past two months, we’ve had several clients who called us out of the blue looking for one specific thing – apartment buildings. Having been in the real estate market for almost 20 years, this isn’t the first time I’ve seen savvy investors looking for investment properties, but not quite in the numbers that I am seeing today. So what gives?
Salt Lake City and Ogden are both in the top 10 places for millennials to move, which was a little bit of a surprise to me here in Park City, until I went down for the Art’s Festival to Salt Lake. Salt Lake has become a pretty hip city. The newly elected Mayor is openly gay, there is a large University, the economy is the strongest in the country, the cost of living is very low, there are multiple outdoor activities, and housing, at least for now, is relatively cheap compared to other big cities.
Another interesting factor that may be playing a part in the boom of investors looking for apartment buildings is the news from the National Association of Realtors saying that the younger generation is putting off buying houses for longer than previous generations, and fewer of them will ultimately end up buying.
Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute, takes a different view: she thinks the younger generation is simply less interested in home ownership.
“This is a permanent shift,” Goodman says.
She cites a 2014 study by Fannie Mae of “prime” home buyers. It found that among young, college educated, upper-income, white families, home ownership fell 6 percent from 2000.
“And that sort of best captures the subtle change in attitudes towards home ownership, because this is a group for whom there’s no reason not to be homeowners,” Goodman says.
Of course more than 80 percent of them eventually buy, but, she says, “they’re doing it later, and a lower percentage of them are eventually doing it.”
So what does that mean? If you are a landlord, it means plenty of tenants to stock your rental properties. At least, that is what our clients seem to think. Before you head off into the real estate market, beware. Buying in a Seller’s market can be tough. Here is a story from an agent in Salt Lake City.
“My clients offered full price with a 45 day close and had the deal re-traded by the owner to another Buyer at 75K over asking price with a 15 day close. Welcome to small apartment buying in Utah.”
Bottom line: as always, make sure you work with a quality agent, if you need financing, have it all lined up, and be ready to move when something good comes your way.