Hi Folks,
Hope you've had an outstanding week.
Today, I'd like to share a very interesting and very informative story that I came across that fits perfectly within the framework of our discussions here on our Blog. The story, which was written by Ruth Simon and Jessica Silver-Greenberg for the Wall Street Journal (and appeared on Yahoo Real Estate), is titled,
"Why It's Time To Buy".
The story discusses what it calls the, "five-year national housing bust", and discusses some positive signs, short-term concerns, long-term concerns, a 5-Year Outlook, and touches on the topic of Renting vs. Buying.
Among the positive signs that were cited are the 50-year lows that mortgage rates have dropped to, as well as the affordability of homes. They also referred to the inventory of homes as, "A historic glut of homes", that has created a buyer's market. They did point to the fact that changes are coming, and mentioned a reference from Moody's Analytics that says the number of distressed sales will begin to fall in 2013 (and prices will increase). Additionally, Home Building is at "standstill" (lower chance of inventory/supply getting worse), and they also cited "Household Formation" (a Demographic Indicator) is on the rise, which promises, as they say, "to take a bite out of the glut in coming years."
When looking at the overall movement of the Housing Market, the short-term looks bleak, as the authors point to Weak Job growth, the fact that Foreclosure sales encompass the lion's share of market, and that Home Prices will fall more in the coming months, per some Economists. For the longer term, they point to the positives of home ownership, such as the ability to deduct the mortgage interest on your taxes, and well as the ability to decorate, paint, and change anything that you want on your own home, "without having to clear it with a landlord." They added to this a, "5-Year Outlook", that points to the coming era of post-foreclosure overload (after the majority of the foreclosure-related inventory), has been cleared, and as housing economists say, "the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over."
Some of the more specific factors they names that will make or break local markets over the next few years, were as follows:
* Household formation is on the rise, per Moodys, and is projected to increase from 950,000 in 2010 to approx 1.2 million over the next decade.
* Higher demand for second homes, per Moodys, should begin, "sopping up excess inventory in much of the country over the next two years"
* Economic Conditions - "Rising incomes and increased employment tend to give more would-be buyers confidence and buying power."
* Mortgage financing is available for people with good credit, but, "nearly impossible" for people who do not meet the lending guidelines.
* Another interesting point that was mentioned was that, "higher down-payment standards are locking some would-be buyers out of the market.", and they pointed to a recent survey by Zelman Associates that showed that, "Just 35% of renters have the minimum 3.5% down payment needed for an FHA loan on the median-priced home in their market"
As for the "Renting Vs. Buying" question that many people have pondered, the authors stated that, "Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won't be the case for long.". They said that according to Moody's Analytics, Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., and that for markets such as Dallas, Las Vegas and Sacramento", "the equation is likely to soon turn in favor of homeownership if current trends persist,"
One very practical suggestion mentioned was as follows: to compare rental prices for similar properties", and to, "wait until the monthly outlays, including taxes and insurance, are equal." and additionally, they said, "You also could factor in the tax savings of owning, which would make buying more attractive even if the gross monthly outlay is slightly higher."
In light of the Economic & Housing Market Analysis information, coupled with the
Rent to Own perspective that we try to bring to you, this story was a direct hit for you...whether you're a homeowner, home seller, a realtor, or
real estate investor. What are your thoughts and comments on this story?
Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog
http://blogging.lease2buy.com
HomeRun Homes Website
http://www.lease2buy.com
TAGS: #Foreclosure #mortgagerates #realestateinvestor #rentalprices #renttoown #WallStreet
