Rents Increasing Rapidly…but Why?
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The real estate market in Houston is booming these days. Prices have increased and the properties are appreciating at even faster rates. Is this affecting the rental world? Yes, as homes become expensive, buyers towards the lower end are edged out of the market. This has caused demand to increase for rentals units and landlords want higher rents.
As for the economy, is it also performing this well? Unfortunately, no. Many of the people still believe that the economy is not very healthy. What is the government doing about this? Artificially boosting asset values, which is why home prices are expected to increase throughout this year.
What does this mean? Since the economy is lacking, the government is trying to create new ways of artificially boosting the economy. The US dollar is directly linked to the prices of gasoline. If our currency weakens, gasoline rates increase, without any regards to how the economy is doing.
In the year 1993, gasoline rates for a gallon was around $1.11 and home prices were under $150,000. The Dow Jones index was recorded at 3,799. In the year 2003, gasoline was rated at $1.59 for a gallon. The US home prices averaged at $195,000 and the Dow Jones index was in the 8,000 range.
At the end of 2013, gasoline prices increased and so did the Dow Jones Index. As for home prices, they did not rise as much. In this decade, the market has seen many ups and downs, which affected prices. Industry experts claim that in 2003, the economy was better than in the year 2013. Despite this, home prices and Dow Jones index was not much. Why is that? We have already told you the answer; the government creates more money by artificially boosting stock prices, bonds and mortgages.
Ever since the recession, many homes have been lost in foreclosure. Where did all these people move? They started occupying rentals units and so rents increased. In fact, the rise was so high that even landlords with small sized rental units enjoyed a significant increase in income.
Recently, the
Federal Reserve announced, they will reduce their costs in mortgages and bonds. What will be the result? Mortgage rates will rise, and more homebuyers will be pushed out of the market. As for rents, they will also continue to rise.
