What goes up must come down. Home rentals and housing prices are on a collision course and it appears buyers are finding monthly mortgage payments are more attractive than renting a property. Who would have thought this could happen and why did this happen. Two main reasons are the high demand on rentals at this time and the other being the drop in housing prices. Where did this demand come from? With so many foreclosures and short sales over the last few years, these families need a place to live. The supply and demand factor at work.
Those distressed properties have also had a negative backlash on home values. This has made homes more affordable and less expensive than renting in many parts of the country, including some higher end communities. Add in the numerous programs and incentives for first time home buyers and there are now even more advantages than renting. The roadblock for many families to purchase a home has always been the needed down payment. It’s now possible to buy a home with less upfront cash than the deposit to rent a property. The traditional deposits for a rental is normally first and last month. I have a first time home buyer, using all of the available incentives, that’s purchasing a 4 bedroom home with an unbelievable $1000.00 total out-of-pocket down payment.
There are other benefits that are huge inducements for owning over renting. The year-end tax perks plus the fact you’re paying down your monthly mortgage, instead of renting and paying off someone else’s mortgage. A loan of $200,000 would cost a buyer approximately $1400 a month. There are 100’s of properties in Yolo County and Sacramento priced under $200,000. The higher rents have made buying a home more justifiable for the average consumer.
There are two factors that could handicap the prospects of buying a home. An increase in interest rates and a rise in home prices might flip the edge back in favor of renting. Both of those scenarios are probable in the near future. Mortgage interest rates have been at historical lows for six months and home prices are showing signs of stability. For those home buyers gambling that either of the two will continue a downward spiral, are not thinking rationally and will miss out on this incredible opportunity that very seldom happens. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs, join my professional networks on Twitter and LinkedIn and easy access to view local area homes for sale in Davis, California and the surrounding communities.