Rent vs. Buy

by on April 11, 2012

There has been a strong resurgence in home sales in the last 3 months. Many people wondered if the market had hit bottom. Well, it did, in December. Now those record lows are gone, Gone, GONE!

Here are a few of the possible reasons for the current trend:

  • Increased buying activity from investors and second-home purchases may be factors behind the recent pickup in home sales, but real estate agents say they are fielding more calls from anxious tenants complaining about rising rents.
  • Average apartment rents rose by 2.7 percent last year, while the national vacancy rate dropped below 5 percent for the first time since 2001, according to a quarterly survey released Wednesday by REIS Inc., a real estate research firm.
  • The largest rent increases came in San Francisco and San Jose, Calif., which saw increases of 5.9 percent and 4.9 percent, respectively.  Such increases are one reason why industry analysts believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year.
  • Historically, the cost to rent an apartment has been about 10 percent lower than the after-tax cost of owning a home.  That rental discount began to fall in 2010 and disappeared entirely last year, according to analysts at Deutsche Bank who track housing costs. By the end of 2011, the bank’s research found that the cost to rent an apartment was about 15 percent higher than the cost to own a home.
  • It isn’t always easy for home buyers to make it to the closing table though. Lending and appraisal standards remain tight, keeping many would-be buyers out of the market.  And aspiring buyers are competing with savvy investors who have turned buying and reselling foreclosed homes into a business.

So, what does that mean for you as a home buyer?

1. Be sure to get pre-approved right away so that if you see something you like, you are prepared to pull the trigger.

2. If you do not have a lot of money for a down payment, do some research on first-time home buyer assistance programs like those offered by the Housing Trust of Silicon Valley or the City of San Jose’s many programs.

3. Work with a Realtor such as myself. The fact of the matter is, that we are checking the market daily to see what’s out there and can help you find properties more rapidly.

4. If you find a neighborhood that you like, but there is a decided lack of inventory, let me know. I will be more than happy to knock on a few doors and see if we can find you a home that you like, in the neighborhood that you want, without have to deal with multiple offers.

Call meTODAY to help you formulate a strategy for home ownership at 408-890-6126!

 

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