Rent or Buy?

by kenlavertu on April 16, 2012

in General Real Estate, Latest News

In 2003 the rent-or-buy question seemed a no-brainer. Homes were available for all types of buyers, even those who didn’t fit traditional profiles. Many people bought their first homes under zero down-payment or zero interest for the first year programs. Then, as the market turned downward, renting skyrocketed. Why?

For starters, banks jettisoned those creative loan programs in favor of the more traditional 20% down/fixed rate, which chased lots of  buyers from the market. On top of that, motivated sellers (those moving out of the area) elected to rent their vacated homes and wait for an upturn rather than absorb a huge cash loss, a short-sale, or even a foreclosure. The market became flush with motivated landlords willing to rent their homes for steep discounts. These forces created an environment where renting really was the cost-effective option.

But that was five years ago. What about now? In our current market, is it better to rent or buy? Obviously, that’s a highly personalized question. Some people are in a position to take advantage of great buys, some are not. But if you are capable of buying right now, you should be aware of two factors that might influence your decision.

First, rent prices have gone up 5% over the last year. The rise is simple supply and demand. Vacancy rates are down and renters are up – lots of people fighting over a fewer properties makes for higher rental prices.

Second, several influential economists believe that we’ve reached or are reaching the bottom of our nation’s housing price drop. With interest rates at all-time lows and home prices at their lowest points since 2003, many speculate that prices will only go up from here.

These are powerful motivators: rising rental rates and declining mortgage prices. Now just might be the time to take advantage of these  favorable market conditions, which constitute a housing market inefficiency that leads to investment opportunities.

I keep a careful eye on the market for buying opportunities – the ones I consider the best investments. Call me today for my list!

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Post by Ken Lavertu

Ken has written 31 articles.

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