It’s Becoming Too Expensive to Rent – It May Be Time to Buy!

Image via Flickr courtesy of Mark Moose

A frightening number was recently released by a J.P. Morgan study that all renters need to be aware of:

Renting is now more expensive than owning a home – by 20 percent.

Let’s contrast that with the post-housing bubble crash. In 2006, as prices skyrocketed and many low or moderate income people found themselves priced out of owning a home, owning a home was 76 percent more expensive than renting. For anyone on a tight budget, it made sense to rent.

Then the market crashed. Prices plummeted. Short sales and foreclosures became the new normal. Instead of this being a time for people to buy and scoop up amazing deals, credit tightened to the point of strangulation, and it became more difficult to purchase a home.

A recent study done by New York University and commissioned by Capital One shows that rent is increasing in 11 major cities around the country. While the Emerald Coast is its own market and does not always follow the trends of larger cities, this is something to watch.

The fear is that current rents and the speed with which they’re increasing aren’t sustainable for many renters. But renters have their own fears – the inability to qualify or afford their own home, what their credit must look like, and that another housing bubble could happen.

• This isn’t 2006 or 2007 and we’re no longer in the middle of a housing market crash. Prices are trending up, but they are no where near their 2003-2006 levels. Housing prices make sense again.
• Thousands upon thousands of people went through foreclosure or a short sale. There’s no need to be embarrassed to have that sitting on your credit report. You’re not alone, and lenders won’t judge you for it.
• Lenders have tightened their credit standards, this is true. If you can show that you have stable, steady income; an ability to afford the loan you’re requesting; and a clean credit history for the past few years, you have a good chance of being approved.
• Low down payment options are available – 3 percent from FHA and 5 percent from many lenders. The 20 percent down payment rule is not a requirement to purchase a home.
• Down payment assistance programs are available to help low-to-moderate income buyers with down payments and closing costs. The idea is to help you own your home instead of renting and paying someone else’s mortgage. Along the Emerald Coast, the Escambia County Housing Finance Authority is the place to go for help.

You don’t have to rent forever. You can be a homeowner again. To find out if you qualify for a home loan, contact a lender. They’ll be able to let you know if you qualify or what you need to do in order to qualify. Homeownership doesn’t just have to be a dream – it can be your reality.