Families who have turned their backs on the struggle to own their own homes in the overheated property market say they have few regrets – even if it means being priced out forever.
The proportion of single-family homes being built for rent has doubled in two years as corporates eye up those who have had enough of paying a mortgage.
Analysts warn that the trend will only drive prices higher for those determined to buy, but the temptation to halve their housing costs and ditch the worries of ownership is proving hard to resist, with a third of all rentals now single-family homes.
Chelsey and Spencer Marks had just spent thousands of dollars on repairing the air-conditioning at their California home when they realized they would have to buy new windows and a replacement pump for the pool.
‘I was like, I can’t do this anymore,’ Chelsey, 41, told the LA Times. ‘One day I came home and I was like, ‘We’re selling the house’.’
Chelsey and Spencer Marks despaired at the cost of maintaining their three-bedroom house in Cathedral City, California, after spending $15,000 on air conditioning alone
The couple has wiped out their debt and improved their standard of living in a new rent-only subdivision 15 miles up the road at La Quinta
They moved 15 miles up the road from Cathedral City to SolTerra, a 131-home subdivision built solely for rent, wiping out their credit card debt, boosting their savings and allowing for an Italian vacation.
‘I don’t need to own it to be living that life that I want to live.’
Mortgage rates have doubled in the last three years and the US Federal Reserve announced on Wednesday that the base rate would stay at its 23-year high.
California’s Legislative Analyst’s Office calculates that monthly payments to buy a mid-tier home are up 80 percent since the start of the decade when taxes, maintenance and insurance are taken into account, making it twice as expensive to buy a two-bedroom home than to rent it.
Erick Carcelen, 47, realized he would pay $6,000 a month to buy his dream home before moving into a four-bedroom, three-bathroom rental in Menifee with his wife and three daughters.
‘I’d rather pay $3,800 and be like, I’m freaking comfortable,’ he said.
Corporate investors became seriously interested in the rental market after the credit crunch of 2008 and are now increasingly building entire rental estates according to Doug Ressler of commercial real estate firm Yardi Matrix.
‘There’s still an inadequate supply of housing, the cost of housing has continued to rise, renters are renting longer,’ he said.
‘The large providers are looking at build for rent as a legitimate strategy to be able to fulfill demand for those people that are on a budget and looking to have a larger square footage than an apartment.’
Erick Carcelen, 47, cut his monthly housing bills from $6,000 to $3,800 by moving with his wife and three daughters to a rental only development in Menifee
Now his family enjoys amenities including a lap pool, spa and clubhouse in a gated community
The 300-home estate was built solely for rental by Tricon Residential, a development company bought for $3.5 billion last month by Blackstone, the world’s biggest private equity firm
Developer Bill Shopoff of Shopoff Realty Investments built the SolTerra estate in La Quinta after realizing the huge untapped demand for larger rental homes.
He fitted out his three and four-bedroom homes with Spanish-style roofs, colorful mosaic tiles, private garages and state of the art appliances.
Tenants can get to know each other in the community pool, clubhouse and landscaped parks.
The estate opened last summer with rents ranging from $3,299 a month for a 1,520-square-foot home to $4,460 for those with 2,400 square feet.
‘I’m not sure that if you didn’t see the rental sign you’d be able to discern the difference,’ he said. ‘That’s our intention. It lives and feels as if you were a homeowner.
California Assembly Member Christopher M Ward is drawing up legislation in a bid to restrain the new rental giants
‘That looks like a hole in the market that we should be trying to solve.’
Some of the world’s largest firms have smelled hefty profits in the distorted housing market and Blackstone, the world’s biggest private equity fund, snapped up leading developer Tricorn Residential for $3.5 billion last month.
It built Carcelen’s home alongside 300 others in Menifee and 170 in neighboring Wildomar, with plans afoot for another 493 in Winchester.
But critics have warned that the American dream of home ownership is becoming increasingly unobtainable for young families squeezed out of a market now geared to renting.
California Assembly Member Christopher M Ward is drawing up legislation in a bid to restrain the new rental giants,…
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