Posted by: Tracy Ross, 1/12/11
Fannie, Freddie & the Rental Housing Market
I read an article by Marc Courtenay, a former Senior VP of Investments for two major brokerage firms in the US, about what affect Fannie & Freddie will have over the rental housing market. Over the past 2 years, Washington has taken extreme measures to keep the housing market alive. But in doing so the tax payer’s will be left with a hefty bill. Conservative estimates are in the $150 Billion range. Only two years after they were taken over by the government, Fannie & Freddie owned more than 191,000 homes; twice that from a year prior. And once more foreclosures take place, that figure will balloon.
Marc says that ‘recent data tells us the housing recovery remains too fragile and feeble for the government to abandon Fannie or Freddie anytime soon.’ Will Fannie & Freddie become Property Managers too? Fannie is currently testing an effort in Chicago to rent vacant foreclosures instead of putting them on the market.
There is no universal agreement on how Fannie & Freddie’s survival will affect the housing market, but Marc believes that the number of Americans who are unable to become owners is growing, thus forcing them into the rental market. Another side however, sees an increase in rental vacancies and combined with the rising problem of unemployment we could see prices decrease further in some markets. Owners and managers have to be more competitive as well as creative in order to move the needle on their vacancy rates.
But Marc adds, ‘On the brighter side, rumors abound that the government will have to step in again and finance a restructuring and reduction of thousands of mortgages to keep families in their homes. If that becomes reality, and if government-sponsored employment programs are also initiated, we may see a decrease of supply in the rental housing market. Monthly prices for rental units could then begin rising.’
The recently elected government officials have an opportunity to make some changes. I guess we’ll have to wait and see. The better equipped and prepared property managers and owners will thrive and continue to find ways to grow revenue.
Fact Source: WSJ.com; September 2010