The housing picture today is significantly different than say five years ago. Five years ago, housing prices in most major metropolitan areas and even the suburbs were at an all time high. They were the days of the "housing boom". While most who presently own a home long for the return of those days, for those who haven't yet realized the dream of home ownership it's important to look at why conditions today might make it more attainable to some than ever before.
Today, we are right in the midst of the after-effects of the "housing bust". What was once unchartered territory for homeowners who were upside down, real estate professionals and banks were short sales that today are very commonplace. Five years ago, you never heard that term. Today, short sales are very much a part of today's total housing marketplace and what's currently for sale.
Most everyone realizes that things have changed. What might not be as obvious is that in today's environment, buying a home versus renting might actually be a more savvy and frugal decision.
The biggest argument for home ownership might be made with respect to the current mortgage interest rates, which are extremely attractive and low. This is a good thing for those who become home buyers, because a lower interest rate means the ability to afford more house for the money.
Couple that with housing prices being down in about 3/4 of the United States and it creates a situation for new buyers being able to find great deals at lower prices but still being able to afford more than they would years ago due to lower interest rates. Often times in many areas, new home buyers who do their homework find out that they can actually buy a home for less than they are paying in rent.
Why is that? Because in part when the housing market went sour and foreclosures and short sales became more commonplace, it created an increased demand for single and multi-family rental properties in the majority of the areas around the country. The homeowners who got out of a home were thrust into the rental market and rental prices in most places haven't decreased as house prices have.
Based on housing figures for new home sales and rentals in July 2011, Trulia released a report that stated that in 74% of the biggest US cities, it was actually cheaper to buy a home versus rent one. That's a pretty staggering statistic because basically it means that in 3/4 of the United States, buying a home if you are able to now makes perfect sense and will actually save you money.
One would have to really investigate prices on both sides in their particular area to make sure that this is true where they live. It seems like in the very large cities, where real estate prices were extremely high like New York, San Francisco and Seattle for example, it still makes better sense to rent versus buy. But those figures provide some pretty good odds that now might be the time to jump into home ownership for many people who can in most areas of the country.
Having said that, it's important to realize that the economy has impacted many and those who have been impacted have sometimes less than perfect credit. While this is a reality of today's economic climate, it's important to understand that credit worthiness can be an important factor both in renting or purchasing a home. Banks, mortgage lenders and even landlords know that.
Overall, the news is good for those who would like to become a home buyer, providing that they can obtain adequate financing to make that a reality.
Before you begin your new house hunt, take assessment of what cash you have to work with for a down-payment. In today's climate you have to have proof of funds to close in the bank. Depending on the type of mortgage you obtain, will have to come up with a down-payment and closing costs.
It would also be wise before you enter the house hunting market to be sure that the odds are in favor of you staying in your new home, should you buy one, for a good number of years. Most experts say five to seven at least. That is how you will enjoy the savings but also stand a better chance of building equity and improving your real estate value as the overall real estate values slowly improve. Real estate is one of those assets that are usually slower to recover as the economy improves, so this is an important consideration before making a final decision.
Do your homework in your local area to find out if you are better off renting or buying. If you are better off buying and are able to do so, you are building equity in something you own versus paying off your landlord's mortgage. Plus, if you are blessed enough to live in one of the areas in the 74% Trulia named, you will be paying less to own your home than you would be paying rent. That would be a savings and savings is always good.
Comments