April 11th, 2017 By Bryan Cerny in 1st Time home Buyers,Blog,Buying and Selling Real Estate,Chesapeake,Financing,First Time Home Buyer,Houses,Mortgages. Tags: 1st Time Home Buyers, Chesapeake, Rental Trap, Rents, Rents Rising, Tenants, Turnover
The Rental Trap
The rental trap is a real. Frequently, it is the lack of information or a wealth of misinformation that causes potential home owners to rent versus buy a home.
Common logic among Chesapeake renters is that renting is a means to control housing costs and to have flexibility in location. Obviously, controlling housing costs is not possible in renting as rents go up and up, especially now as the market has rebounded and the competition for rental property has increased.
Without doubt, renting in Chesapeake provides more flexibility than buying a home. Yet, as easy as it is to move also allows for high turnover in a given neighborhood or rental complex which can result in highly changing safety, economic and social(more kids, less kids, older people, younger people, etc.) elements. The change could happen monthly!
Further, Chesapeake renters are trapped by misinformation on the amount of downpayment required to buy a home. It is still too common that a renter thinks they must save 20% downpayment prior to even looking for a home. Secondly, many renters believe they can’t buy due to “bad credit”. Finally, renters think that purchasing a home will cause higher housing costs versus renting when the opposite is true in Chesapeake. You will pay less for the home purchased versus the rent being paid!!!
If you are renting, call me today to learn how to get out of that trap!!! 757 580-6546
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.
Don’t Become Trapped
Jonathan 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!
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!
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