Do you know someone who is renting right now because it is too expensive to buy? We all do! That last hold out of the economic downtown dooms day naysayers. For a few years, it was hard for home buyers of all backgrounds to get a loan, especially those who had not owned before. The economy was rough and many homeowners who bought in the bubble were upside down on their homes. But those days are on their way out and renting is getting more and more expensive. Here’s the break down of the current market of rent vs. buy.
Homeowner living room
Rent is going up! The prediction for 2016 rental rates is an increase of 8%. I recently looked up rental rates in my home town of Chattanooga and for condos and houses, they are nearly the same rate as the mortgage would be for those same properties. In fact, rental rates have gone up twice as fast comparison with wage rates since 2000. That is a massive difference, especially when you consider your rate of return (which is nothing). Most renters started out with temporary housing in mind and have ended up continuing to rent for an average of 7 years. Imagine what 7 years of equity would be. Think about the fact that you just paid 7 years of equity for your landlord. Yikes!
Homeowner's master bedroom
Interest rates are holding steady for now. The market is coming back, thanks in part to a lowering of unemployment. More and more banks are offering low interest home loans and most people qualify (even those who suffered a foreclosure early in the downturn). Home prices, however are going to continue to recover. Buying a home that is priced right is the likely scenario for today’s buyers. This means that their investment is solid. Purchasing within your means is still the best plan, but your means may be a lot better than your rental situation.
Your rental kitchen
Tax breaks for home ownership can be really beneficial. Interest payments, mortgage points and property taxes can be deducted from your income taxes, giving you extra money in 2016. Owning a home does present extra costs that renting does not, but many can be tax deductions such as making your home energy efficient.
The bottom line is this, renting makes someone else wealthy. Who are you investing in with rent? Not you. 2015 is the time to buy a home. The market is good, the loans are there and so is the job security. If you are a millennial who has been renting and is tired of paying high rent to cover someone else’s mortgage, now is the time to act.
We have helped hundreds of people buy their first home. Our team has two dedicated buyer specialist who are ready to use their expertise to help you not only find the perfect home, but also to guide you through the steps on the path to home ownership. Contact Carmen Patty or Amy Shulman today.