OPISAS REinsight publish an analysis on why US residential rents will keep offering steady yields.

The strength of US residential rentals.

What to expect in the near future, according to a detailed analysis on the effects of economic and health turbulences from the recent past, both in the USA and Worldwide carried out by OPISAS REinsight, the observatory on international real estate markets promoted by OPISAS, an international group specialized in residential portofolios with a focus on accessible and already rented properties exclusively in the USA, that transited more than 3,800 properties since 2008, outlines an interesting scenario.

Data in hand, investing in US real estate and in particular in medium-tier residential properties with rental yield, provides ample guarantees of stability, wealth safeguard and steady cash flow. An even more interesting option during a phase of high volatility in financial markets.

Click HERE to read the full report

Highlights of the Report

Residential rents in the US, given in hand, will continue to be an excellent choice to diversify the portfolio with stable cash flows. US real estate remains the ideal option to protect your capital from the volatility of financial markets.

This is especially for:

• Economic measures taken by the US administration
  • Direct checks to all Americans, worth of $ 1,200 for adults and $ 500 for minors
  • $ 850 billion in subsided loans and aid to companies
  • Increase in unemployment benefits
  • Guarantees from FED (US Central Bank) on university loans, financing for purchasing cars, credit cards

• The characteristics of the current US real estate market, which is not what it used to be in 2008
  • Limits to the increase of interest rate over time
  • The applicant has to provide with proof of being financially sound even at the high interest rate possible
  • It is requested full documentation
  • Mandatory down payment
  • Mortgage will not be provided with Credit Score below 620

• The anticyclical effect of monetary rates at zero
  • With an eye for the medium term, when health emergency will be under control that important decision could prove to be an element for boosting the demand for housing mortgages and the subsequent housing price increase

• What happened in the past during health emergencies and economic contractions
  • Health emergencies and global real estate market:
    • During 2003 SARS epidemics in Hong Kong, economy had an abrupt halt, with a 5-10% drop of GDP; the bounce and following growth have been as quick tough, as the epidemics ended
    • During SARS, housing prices in Hong Kong remained stable
    • What instead had been practically blocked, even though just temporarily, was the volume of transactions, reduced up to 72%
    • Potential buyers simply stopped visiting housing. They avoid human contact due to so-called “elusion behaviors” such as avoiding travels, restaurants and public reunions, mandatory in the event of social distancing measures
    • Once the epidemics ended, transactions returned to previous volumes
    • During the current emergency in China, the first news show how housing price did not diminish but transactions did (up to 98% reduction)
  • Economic recessions and real estate market in the USA:
    • Only twice, in 1990 and 2008, housing prices dropped
    • In 1990 of less than 1%
    • In 2008, economic recession had its origin from real estate market
    • During the other three recessions, housing prices actually increased

• The price of residential rentals in the USA does not follow housing price. The figures from biennium 2008-2009 prove it
  • o The index on residential rents trends in the US cities, which takes into account first homes, calculated by FRED® Economic Research of Federal Reserve Bank of St. Louis, gives us a punctual, monthly glimpse each month from decades now on the positive trend of residential rents in the USA; from the ‘80s up until today, through 4 crisis, the index and thus the rents themselves, kept growing steadily
  • o In a country such as the USA, where most of the population rents, a home, meant as a roof above one’s head, is a primary good.

• The formula for stability of the US real estate and rental market: High demand VS Low supply
  • In December 2019, Zillow.com estimated that there are 1,489,417 real estates for sales in the United States – 120,009 less than the same period in the previous year
  • The drop of about -7,5% has been the worse since the platform started registering inventory data in 2013
  • The starting figure was of 2,017,000 real estate for sale in January 2013, and decline has been steady
  • There are 1,4 M houses for sale in the USA, for a population of 333 M people; in Italy 1,5 M for 60 M inhabitants

Click HERE to read the full report.