Frazier: Military not responsible for high rental prices | Guestview
The price of real estate is always a hot topic, but never more so than now. High rental rates, high sales prices and now the high interest rates. The fact that I have been in the business of selling and renting real estate for 45 years in this area doesn’t necessarily mean I can accurately predict what is coming next, but a historical perspective can’t hurt either.
Let’s talk first about this buzz going around that the military housing allowance has caused the high rental prices because of the recent increases in the allowance. Supposedly landlords and property managers are taking advantage of these increases to artificially bump up rental rates.
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That would be an interesting argument except for the fact that there is a huge shortage of rentals in our market. For those of you with no familiarity with military pay, active duty personnel receive a monthly stipend to use toward housing expenses, rent or mortgage. It is based on rank and whether the person is single or has a family. If housing prices are really high in certain areas of the country/world, there is an additional variable allowance based on that area. So, what drives these high prices?
Supply and demand drive prices in most areas of our economy, and the housing market is no exception to this rule. At my property management company we get dozens of applications for each property that comes on the market and, of course, the prices keep going up because of the demand. The military has been responding after the fact to the rising rental rates and housing prices. Most military families have not found adequate housing for their housing allowance in years. It assists with their housing needs but it doesn’t cover it 100%.
The past 12 years have been amazingly good for real estate, more people have moved here than have left and builders, both single family and multi-family, have not been able to keep up with the demand. What happens when there is more demand than supply? The prices go up and they continue to rise until supply and demand become more even. Builders also became more cautious after the 2008 housing crash because many of them didn’t make it through the crash, and banks are still far more conservative with their lending policies, too.
Most businesses have had to do some serious adjusting of their pay scales and benefits over the past few years because unemployment is also at an all-time low. Even then we see long lines at the fast-food restaurants and “Now Hiring” signs everywhere. These are all signs of a growing and prosperous economy that can be very frustrating if you need a reasonably priced rental.
It’s still true that the cost of living is less expensive 25-50 miles away from the center of the economy, which is military and tourism, but those distances are now being stretched even more. And, pouring fuel on the fire (pun intended), how much do you really save anymore with a long commute? Be on the lookout for more new housing within the existing footprints of our cities as redevelopment will help cut the commute cost and time for many who can’t or won’t live an hour or more away from work.
There are groups within our tri-county area who are working with the military and county government to work toward long-term solutions for a problem that will remain persistent in the short term. We have lots of traffic problems to solve as our counties continue to grow at breakneck speed that the counties and the military are addressing. Progress won’t move fast enough, it never seems to in areas where people want to live and we will probably have several more economic cycles until real progress can be seen. In the meantime, let’s enjoy the beautiful sunrises and sunsets, the view when you cross over the Destin Bridge, the drink over looking the Harbor, your children’s ball games. It is a bit of paradise.
Gloria Frazier is the broker/founder of ERA American Real Estate in Shalimar.
This article originally appeared on Northwest Florida Daily News: ERA's Gloria Frazier: Military not responsible for high rental prices
