After the policymic article and my posting yesterday, this is my final thought on the QRM. You already know what I think it will do to minorities and first time home buyers, and what I think it will do to current home owners. But what about the rental market?
Sine the number of people able to buy a home is going to diminish, you would think that it would lead to an increase in the rental market. It will, if people can’t buy a home one way to improve their living situation is to search for better quality rental properties. But the rental market is tied in to the selling of homes. Most rental homes are done through investors buying vacant homes, renovating them, and renting them out. These investors will likely be squeezed by the new rules as well. Instead of keep more money on hand to do the renovations, investors will have to use that capital for down payments and if they don’t go to 20% they will pay the extra mortgage insurance. I am not sure what investor wants to limit their cash flow and pay an additional premium. Those that do this will pass the cost on to the renter with higher rents.
Paying higher rents will make it less likely they will be able to save a large down payment, making the renter more likely to stay where they are. Other investors not wanting to take on the added cost risks will back out of being investors. This leads to more of a stalemate in housing sales and limits the number of rental units available, making rental prices go up. There are only but so many places to build apartments and apartments aren’t for everyone.
For both renters and home buyers, these new rules make it harder to improve your situation. Limiting people’s options of where they can live is never a good thing. Steering in both the renting and home buying process is discrimination. These new rules are making that housing discrimination easier. People are being forced to live where they don’t want because that is where the market is placing them.
Looks like now the regulators want to segregate minorities into certain communities. Making it hard to buy a home is one thing, but when that trickles down into the rental market it becomes a bigger problem. Now families that aren’t looking to buy a home will be saddled with higher costs and limited options for a growing sector.
With that I end my thoughts on the proposed rules.