In good news for real estate investors, Fannie Mae Chief Economist Doug Duncan reported new housing inventory is shrinking.* Today, there are 1.3 new single family homes completed for each new house sold. That’s down from the historical average of 2 new houses per one sold. Real estate investors should cheer this news because it points to a shrinking inventory of houses which many are in the price range for the first time home buyers in suburban areas and not in established, central neighborhoods.

According to the article, the demand for housing is certainly there but if inventory doesn’t keep up with the demand that will increase the price of new homes as well as continue pressure on rental rates. The increase in rents has been on a steady yet continued climb over recent years and this news portends that trend to continue at least into next year.

Real estate investors who hold for the long term have more than likely refinanced into today’s low fixed rates. According to Freddie Mac’s most recent mortgage rate survey, the 30 year fixed rate for a single family, non-occupied home is still under 4.00%. With rental rates continuing to rise this means increased cash flow over the short and long term as financing costs are kept low while rental demand remains high. For real estate investors who haven’t taken advantage of the current interest rate environment either for an acquisition or to refinance an existing note it’s a good time to consider both.

*National Mortgage News, Feb. 18, 2016