In this episode, I discussed a recent AP article that shows the small cost differential between renting vs. owning a home. you can read the artcle here.
Hello everybody and welcome to another episode of the Reside Daily Bite; I’m your host, David Doucette. Today, I want to talk to you about a recent article, an AP article, out of DailyNews.com that talks about renting versus home ownership. The title of the article is “Should you buy or rent a home? Cost gap narrows”.
The article starts, “Thinking of buying a home? Consider this: The gap between monthly rents and mortgage payments is at its lowest level in 20 years. The study, part of a week-long look at homeownership by the AP, found years of falling home prices and low interest rates have created the ultimate buyer’s market. But while buying is more affordable, it’s not necessarily easier. Tougher lending standards have made it harder to qualify for a home loan. Tax incentives for homebuyers will expire April 30, (we’ve been talking a lot about the federal tax credit) and interest rates are expected to increase this year.”
And the article states, “Psychologically, the consumer doesn’t feel like it’s a great time to buy.” This is interesting…the next paragraph, “The analysis of 45 metro areas found the difference between the monthly mortgage payment on a median-priced home and the median rent is down to $256.” So really, that gap between renting and owning a home is $256. “The last time that gap was anywhere near that small was in 1993 when it fell to $264, according to the study.”
And another interesting note -for those of you in the Los Angeles area, “Renters will save $1,000 or more a month in metro areas such as Los Angeles, Seattle, San Diego, San Francisco, and San Jose.”
And then it goes on to say, “There are still significant tax benefits, including capital gains deductions for property taxes and loan interest. A home appreciates in the long run and acts as a hedge against inflation. And it also helps diversify your assets…” So, I think the moral of this is if you’re considering buying a home, you work with your realtor, talk to your mortgage broker and run some numbers. There are a lot of factors that you will be considering whether you’re renting or buying, and in some cases, it may make sense for you to rent for another year depending on everybody’s situation (every situation is different).
Again, work with your realtor, run some numbers and I think, this is some interesting statistics and we’ll think we’re going to see home values start to go up – at least here on the Westside we’ve seen evidence of that.
And one last thing actually…”Home prices are expected to start rising before rents. This is especially true in coastal markets such as Los Angeles, San Francisco and New York. You’re actually going to see affordability decline in those very traditionally expensive housing markets. It will be more attractive to rent than to buy.”
So, weigh your options. Be an informed consumer; an informed home buyer.
And, my name is David Doucette, thanks for checking out the reside Daily Bite.