While we've continued to enjoy a real estate scene blessed with ultra-low mortgage rates, it was perhaps inevitable that someone would draw a comparison between the current costs of renting and buying.
This has now happened and the results are very interesting, especially if you have aspirations and the financial capability at present to own a home.
The investors.com website ran an article recently that demonstrated that in 42 states, including California, renting is now more expensive per month than a mortgage (including property taxes and any applicable insurance), if one looks at median rental prices for single-family homes and a 20% down payment has been made on a home loan, at a fixed interest rate for 30 years.
To be more specific, in California as a whole, the article says that it's actually $179 per month more expensive to rent, given the above criteria.
While I totally accept that these statistics aren't going to change the world for every renter, far from it in fact, I do believe that they strongly reinforce the need for renters with robust finances who can qualify for a home loan right now to carefully consider their situation without delay.
This is a compelling reason not to wait for something to change, most especially if mortgage rates start to steadily increase, as they one day inevitably will do.
We've seen so much buyer enthusiasm in most sectors of the market this year, mainly due to the wonderfully low mortgage rates that will, I think, be the most defining story of our industry this year. Wise first time buyers are recognizing that there is an opportunity right now to lock in a low rate for the life of the home loan. In many cases this can be the difference between investing in a property of your own or continuing to help to fund your landlord's investment portfolio - a sobering thought isn't it!
I also came across a point made in another related article I read this week that I felt I should also share with those of you considering home purchase for the first time. It argued that, whether you're a renter or a buyer, you're either paying your own mortgage, or that of your landlord! Another point that I feel is very relevant is that even if the commitment of a home might seem frightening, surely it's more scary to quite possibly be spending more per month on your rental than your home loan payments, with absolutely no equity being built up in the property for you.
And at the end of the day, whether you own or rent, these new renting vs. buying statistics show that the level of required regular financial discipline is now often even more demanding if your home isn't yours! And never forget that, unlike a fixed-rate mortgage, your rent will continue to increase all the time, as not everyone has the financial chops to own a place of their own and demand for rentals remains very high, in spite of the cost. The trick is to break the cycle if you possibly can.
Another point I feel worth stressing is that if you've been turned down for a mortgage in recent years, why not revisit the possibilities now that mortgage rates are so much lower. Remember that a decline decision is only an assessment of a set of financial circumstances and the willingness of lenders to lend at a certain moment in time. There are basically unlimited chances when it comes to trying to get on the home ownership ladder.
Whatever your specific thoughts are about home ownership, please don't hesitate to contact us for expert guidance precisely tailored to your circumstances. We can also put you in touch with top local mortgage professionals to start the important pre-qualification process.