How Mortgage Rates Affect the Rental Market

www.pmdave.com PmDave: How to mortgage rates affect the rental market? Dan Daugherty: Usually when you have low interest rates, you have more individuals that can afford to buy. The unfortunate thing about the last 4 years is a lot of these individuals were getting in to really low mortgage rates 3 or 4 % APR that were not fix, that were variable. They became variable after maybe 2 years. So now their monthly mortgage is some cases has doubled. So in these cases they are either foreclosing on the properties or they are trying to get out some how, they can't refinance unfortunately that is what we are seeing a lot in Las Vegas and Colorado the foreclosure rate has gone through the roof because of these two year ARM's is what they call them and now they are paying twice as much as they were paying a year ago. So these people still need to rent or live somewhere. What we are finding is if they foreclose they either go into the apartment complexes or single family homes but sometimes their credit is so bad that they can't get back in to a single family home so you see them going in to apartment communities. PmDave: So those people are taking away the inventory so the price should be going up. Dan Daugherty: Usually it is the whole supply and demand curve, if there is less supply and more demand you are going to see a price increase. But if there is equal - if supply is increasing just as demand you might see a slight increase in pricing but that says constant and in come ...



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