Luxury Valley Homes Arizona Real Estate Blog: Rental Trap: Be Careful...Don't Be Ambushed

Rental Trap: Be Careful...Don't Be Ambushed

Rental Trap: There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.

Rental Trap - Don’t Be Ambushed

Rental TrapJonathan Smoke, Chief Economist at realtor.com, reported on what he calls a “Rental Affordability Crisis.” He warns that,

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

In the Joint Center for Housing Studies at Harvard University's 2016 State of the Nation’s Housing Report, they revealed that The number of cost-burdened households rose to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50% of income for housing) jumped to a record 11.4 million. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent

In Smoke’s article, he went on to say,

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”

“While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

Perhaps you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:

"It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line: Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

Jeff DaleyPeople that read this article also found interesting the article that follows:

Preview of article: Some of the highlights of this infographic show the concept of Supply & Demand is a simple one. It demonstrates the best time to sell something is when the supply of that item is low & the demand for that item is high!  It demonstrates the best time to sell something is when the supply of that item is low & the demand for that item is high!  Supply-Demand: How it Impacts the Real Estate Market

Comment balloon 3 commentsJane & Jeff Daley, PhD • April 11 2017 06:03PM

Comments

"It is cheaper to buy than rent"-- I've told my children this for years. It is very true, even here in the Bay Area.

Posted by Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900, Family Helping Families Buy & Sell Homes 40+ Years (Get Results Team...Just Call (408) 252-8900!) 3 months ago

Good post to share with my renting friends.  Thanks for sharing!

Posted by Michelle Edwards, Inland Empire Realtor® (Realty One Group Trilogy) 3 months ago

Many good points made in this post.  What first time buyers may also want to consider, changing their tax deductions with their HR department.  This will allow them to take more home, but the mortgage interest deduction should prevent them from creating a tax bill due to the IRS.

Posted by Aaron Anderson, Mortgage Geek since '96. Dad, Husband, hiker. (HomeStreet Home Loans) 3 months ago

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