Data released Monday by real estate Web site Trulia says even with the current state of the housing and financial market, it is still more affordable to buy a home than rent one.
Trulia’s latest Rent vs. Buy Index studied the 50 largest cities in the United States and found that it is more affordable to buy than to rent a two-bedroom home in 72 percent of the cities.
Based on the guidelines the company used to conduct the survey, only four cities – New York , Seattle, San Francisco, and Kansas City, Missouri – meet or exceed the price-to-rent ratio of 21 that means much more expensive to buy than rent in that area.
Accodring to the survey, a price-to-rent ratio of 1-15 means owning a home in that city is much less expensive than renting, and a ratio of 16-20 means the costs of homeownership exceed the cost of renting, buy financially, it might still make sense to buy.
“Since the start of the ‘Great Recession’, many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets,” said Pete Flint, CEO and co-founder of Trulia.
He continued, “Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling house market in the short term. Even high-qualified homebuyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan.”
The San Francisco, California-based Trulia calculated the price-to-rent ratio using the median list price compared with the median rent on two bedroom apartments, condo, and townhomes listed on their Web site.
Cities that were most affordable to buy versus to rent included Miami, Las Vegas, Phoenix, and Fresno. Los Angeles, Oakland, and Portland as among those that fell in the 16-20 price-to-rent ratios.
“Although owning a home is relatively more affordable in most cities, market conditions have caused an interesting demographic swap between traditional renters and buyers,” said Tara-Nicholle Nelson, consumer educator for Trulia. “For example, lifelong renters are seizing the opportunity to become homeowners while affordability is high. At the same time, a growing number of long-time homeowners are finding themselves tenants — some by choice and other by necessity.”
Article from DSNEWS.com by Joy Leopold
It seems that the housing market is finally showing signs of a recovery. We are not suggesting that it will come roaring back and we will see 2006 numbers again. However, the National Association of Realtors released their December Existing Home Sales Report yesterday. The report showed a 12.3% increase in closed transactions over the month before. Earlier in the week the Census Bureau reported that:
Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.
Should we believe that real estate is starting to make a comeback? To some degree, we think yes. Both of the above reports are promising.
However, not all the news in the reports was positive. Existing home sales were slightly down from the same month last year. Housing completions were down 22.2% from last year’s numbers. Yet, we must also factor in that the numbers from the end of last year were artificially inflated by the Homebuyer Tax Credit. Any correlation between these numbers is not an apple-to-apple comparison.
These reports, coupled with anecdotal information we are receiving from the agents we coach all across the country, seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry.
Bottom Line
Even though there is a huge amount of visible and shadow inventory which will continue to put downward pressure on prices, it seems that buyers are beginning to realize that there are tremendous opportunities in the market.
Article from Firstteam.com by M Emerson
Everyone has an opinion on whether it is the right time to buy or sell! If you are trying to decide whether to jump into this market it is incumbent upon you to talk to a local expert, get the real details on the local market trajectory, and be realistic.
We have been making two major points for several months. If you are selling a house, you must do it now AND if you are buying one, you must also do it now. This sounds crazy – but it is true. PRICE is the most important thing to a seller. With prices projected to fall through the first half of 2011, if you want to sell, do it now. The alternative might be to wait over a year just for prices to recover to current values.
The second point revolves around the fact that buyers are more concerned about COST (price AND interest rate). Fannie Mae, the National Association of Realtors, theMortgage Bankers Association and the PMI Company are all projecting interest rates to rise this year. If you want to buy, your best time to purchase could be right now.
We have had people question us on the second point. We truly believe it is a good time to buy however. And a new survey says that the majority of Americans agree with us. Gallup just released a poll showing that 67% of Americans think this is a good time to purchase a home. The interesting thing is that the same poll showed that more people believed that prices would decrease (27%) than increase (21%). Most people realize that this is an opportune time to purchase even if prices continue to soften.
Even the Gallup people weighed in on the subject:
Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys.
Bottom Line
There may be people advising you to use caution before buying a home right now. That is probably good advice. However, there is a difference between caution and fear. Fear could paralyze you and prevent you from making a good decision. Caution will make sure you make the right decision. And remember: if you do think it makes sense to buy your home today, 2 out of 3 people agree with you.
Article from Firstteam.com by M Emerson
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