NAR reports that rents have increased 4.1 percent this year and its continuation is forecasted to rise 4.6 percent next year. More specifically, Reis, a market research firm predicts Rents to rise by 4 percent each year from 2014 to 2015.
Positive signs for landlords, as rentals are rising more rapidly, resulting in higher rental costs in metro areas.
“The pendulum has definitely swung back in favor of landlords, not renters,” Ryan Severino, senior economist for Reis, told USA Today.
A recent Trulia data report shows that you can save hundreds of dollars by buying a home instead of renting one. With today’s low mortgage rates, it’d be a tough argument against homeownership. Trulia reveals that buying is 45% cheaper than renting, basing their data off a few market assumptions. Living in your home for at least seven years and itemizing federal tax deductions are examples that are factored in this report.
What difference does seven years make, you may ask? Seven years is the amount of time the average American lives in their home before deciding to move again. And by that time, you’ll most likely break even on your home.
There are two other reasons why buying may be cheaper in the long run:
1. Home prices have risen 2.3% year after year, whereas rent prices have risen 4.7%
2. Mortgage rates have fallen to 3.5% (the best of this summer)
If you are in the 25% federal tax bracket, are able to afford a 20% down payment with a 30-year fixed mortgage rate of 3.5%, buying a home is “cheaper than renting in all of the 100 largest metros by a wide margin,” according to Trulia.
More specifically, if you’re a Providence resident or thinking of relocating to the area, buying will be 46% cheaper than renting, according to Trulia’s data report for Summer 2012. On average, the difference in savings may be up to $817.00 in monthly costs.
For the full report, go to: “Buying A Home Is 45% Cheaper than Renting”-Truliablog.com
Contrary to media reports suggesting that renting is more financially beneficial than home ownership, a new study by Zillow proves otherwise. The costs of homeownership may “break even” in about three years or less, making it more of a lucrative investment than renting. Zillow’s new study factors in more than three-fourths of 200 metro areas nationwide.
Initial obligations that often deters potential home buyers, such as: down payments, closing costs, and property taxes, are becoming more of a money saver than the cost of long term renting. Over the past year, the cost of renting has risen more than five percent, says Stan Humphries, Zillow’s chief economist. Even more so, Zillow reports that some markets have better luck than others in terms of breaking even. In Miami, for instance, the rising costs of city living allows home owners to break even after 1.6 years.
For those debating between renting or buying, factors such as falling home prices and record low mortgage rates make homeownership to be the advantageous investment.
Is now a good time to buy? A recent survey by Fannie Mae Housing cites that 73% of Americans are feeling the pressure of purchasing rather than renting their next home. With the anticipation of home prices and mortgage rates increasing in the next 12 months, anxious homebuyers are finally feeling ready to take the plunge.
According to Fannie Mae’s Chief Economist, Doug Duncan, some potential homebuyers feel that renting is becoming more costly than home ownership because 48% of Americans are expecting rent prices to continue to increase. Sounds like the next logical step would be to invest in a property yourself, right? Especially when the same survey reports “44 percent expect their financial situation to improve in the next year.”
But is it safe to accurately project a timeline of the recovery process, and then plan accordingly?
It would seem advantageous for anxious homebuyers to purchase in a market where short sales prevail. Not only is a short sale purchase a good option for the homebuyers, but “banks are realizing that short sale transactions usually sell for higher prices than foreclosures,” according to an article on RealtorMag. In result, banks are speeding up the short sale process and taking steps towards making it a more seamless transaction for the homebuyer.
Existing home sales saw a 2.6 percent decline, from 4.60 million in February to 4.48 million in March, but the numbers are much better than March of last year’s (5.2 percent above the 4.26 million-unit). While sales will vacillate from month to month, “job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year,” says Lawrence Yun, NAR chief economist.
So is it a good time to buy? If Yun’s projections are correct, and the economy is slowly but surely bouncing back, then now would be a good time to invest in a home while prices are low.