It sounds too good to be true, but it is! It is actually cheaper to own than rent. Rents are going up while at the same time, market conditions have created a great opportunity for home buyers. In fact, right now is one of the best times in decades to buy your own home.
There are a lot of factors to consider when determining whether to rent or own, but a central aspect is the monthly cost. Demand for renting has picked up and it is driving up the cost. A recent report by the Harvard Joint Center for Housing Studies found a full 35 percent of Americans decided to rent in 2012, up from 31 percent in 2004. Apartment vacancy rates are now at their lowest level since 2001. This is great news for anyone who wants to become a landlord, not so good for those who want to rent.
This new demand has helped to push up the cost of renting. The same Harvard study found that renting has become significantly less affordable in recent years. Real median rents adjusted for inflation increased by 6 percent nationally between 2000 and 2012, while the real median income of renters actually fell by 13 percent over the same period. In addition, the report found that half of U.S. renters spent more than 30 percent of their gross income on rent in 2010, up a record 12 percentage points from the year 2000.
This increase in rent brings us to an interesting crossroads. For the first time in more than 20 years, owning is cheaper than renting on a relative basis, according to Wes Moss, a certified financial planner and radio show host in Atlanta, Georgia.
Wes laid out the numbers in a recent article:
“In 1994 rents averaged $450 per month while mortgage payments averaged $550 a month. In 2008 it was still less expensive to rent than buy — $700/month on average to rent versus $800 for a mortgage. But in 2013 that changed. Rents now average $738/month while mortgages average $615.”
Wes isn’t the only one saying this. There is an overwhelming amount of data to support this claim. For example, a new report from Trulia found that, nationally, it’s 35 percent less expensive to own a home.
How about in Atlanta? Well, Trulia has launched a Rent vs. Buy calculator, a great tool that highlights the cost difference in specific metro areas. According to the calculator, if you are currently renting for $3,500 a month, you could purchase a $600,000 home for 27 percent less than what you are currently paying. How about for another statistic? It is 47 percent cheaper to purchase a home in metro-Atlanta for $300,000 than rent a home for $2,500 a month.
Not paying rent that high? Well, it is still 39 percent cheaper to purchase a $200,000 home if your rent is $1,500 a month. Click here to check out the calculator for yourself. All of these statistics include a 20 percent down payment on a 30 year fixed mortgage, estimated property taxes and a home insurance policy. The calculator does not include any estimates for association dues.
The bottom line is that it is an exceptionally good time to purchase a home. Whether you are a first time home buyer or an investor, low interest rates and competitive home prices have combined to make right now one of the best times in decades to purchase a home.
Don’t be the one who wished they took advantage of this once in a lifetime opportunity! Years from now, we will probably look back on this time as an exceptionally affordable time to own a home. The time to act is now.
If you are interested in discussing these new real estate opportunities, please contact Emily Freeman of Keller Williams Realty Peachtree Rd.
Emily Freeman
Keller Williams Realty Peachtree Road
(cell) 770-366-8876
(office) 404-419-3500
(fax) 404-419-3501
emilyfreeman@kw.com
