Renters Losing their Edge
by Buyer Consultant - Debbi Briggs ~ February 26th, 2009. Filed under: Asheville real estate news.According to a recent article in The Wall Street Journal, the relative cost of owning a home versus renting is swinging back in favor of home ownership in some U.S. markets du
e in part to declining home prices.
In the past, as home prices increased, the demand for rentals increased, widening the gap between owning versus renting. Now, lower prices and interest rates are encouraging some buyers to step up to home ownership.
Historically, after-tax mortgage payments have averaged 26 percent more than rent payments and in 2006, the difference reached as high as 66 percent. It’s a different story today. By the end of 2008, mortgage payments averaged just 24 percent more than rent payments, the narrowest gap since 2001.
Lower interest rates, first time home buyer tax credit for this year, and home pricing trends in the Asheville real estate market are key factors to keep an eye on when considering purchasing a home versus renting in Asheville.
Please contact me if you would like to review your options to see if now is the time to buy or continue renting.
- Debbi Briggs, Buyer Consultant
Sphere: Related Content
February 27th, 2009 at 11:40 am
I see the two groups - renters and owners - in a kind of race to the bottom right now. Government incentives like the new $8000 tax credit are attempting to revive home prices by encouraging home buyers. At the same time, too many homes have been bought and many of those have been put on the market as rentals (often with negative cash flow) since they can’t be easily sold.
The result is that rents are going down - I personally lowered two of mine to insure occupancy - while home prices are also going down. The true landlords will perform much better in this market because their buying decisions have always been determined by the cash flow, not the market value, of a property. But it still hurts everyone. Which group is the best to be in, renter or owner? Seen purely as a monthly expense, I think the renters will win out - my opinion.