Rising Rent Propels Buyers into Housing MarketPosted 07/08/2015
Housing experts have been telling us for years that owning is cheaper than renting a home. In fact, as of May, the latest data from Trulia, an online real estate company, indicated that buying is 35 percent cheaper than renting in all 100 of the top metro markets, compared to 33 percent cheaper one year ago.
Now, with rental rates rising faster than home prices for the first time in years, the wisdom of owning vs. renting is becoming even more clear to potential buyers who formerly felt priced out the housing market. Zillow reported in April that rents rose nationally an average of 4 percent compared to home values, which inched up by just 3 percent from the previous year. This contrasts sharply to just a year ago, when housing prices were gaining 8.8 percent year over year, while rent increases maintained a steady pace of 2 to 3 percent, annually.
The shift is propelling more and more renters into the housing market, according to one real estate agent in California, who told Zillow, “We finally have more buyers who are serious now. Landlords are raising rents ridiculously high, and people are saying, ‘That’s it – it’s time to buy.’”
A caveat about Trulia’s comparison of the rent vs. own question: the research assumes three main conditions. First, that the owner will stay in the home seven years; second, that federal tax deductions are itemized in the 25 percent bracket; and third, that the buyer’s 30-year, fixed-rate mortgage rate is 3.5 percent or below, with a 20 percent down payment.
Even so, the fact that rental rates are rising faster than housing values is tough to deny for anyone looking to add more fixed costs to their monthly budget. If you’re a member of the Renter Nation, it’s worth your time to investigate whether making the move to homeownership is right for you. Please check us out, either online at www.maracayhomes.com or in person. Maracay Homes offers single-family residences of various sizes and price ranges in the most popular locations in metro Phoenix and metro Tucson. We’d love to welcome you to the neighborhood!
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