Did you know that the average American can’t afford to buy a house?
There is a HUGE affordability gap between renting and owning real estate, and it’s growing every year.
And, not surprisingly, the rising interest rates only made matters worse!
Let’s take a look at this example of a 3 bedroom/2 bath home- 1,585 SF that was sold in 2020 and then sold again in 2022.
Let’s compare the affordability of the same house 2 years apart for 2 different owners.
Not only has the house appreciated in value, making the purchase price more than $100K more, but the interest rates are much higher now, making the monthly payment higher. The new buyer not only has to come up with a more substantial down payment, but the monthly payments are higher due to higher taxes and a higher mortgage interest rate.
This is pushing renters into apartments longer and preventing many people from purchasing their own homes, which in turn drives the demand for apartments.
We all remember from Economics 101 that when there is a high demand of anything and a low supply, this drives prices up. This same principle applies to apartments. There is a huge housing shortage that is predicted to continue for the next decade.
This supply and demand imbalance makes investing in apartments a no brainer. As long as this affordability gap exists, we will always have tenants which de-risks this asset class making apartment investing a safe one!