Earlier this year, foreclosure-tracking specialists RealtyTrac predicted that by year's end, more than 1 million homes would be lost to foreclosure. Plus, the U.S. Census Bureau just released information stating during the second quarter of this year, the national homeownership rate fell to 66.9 percent. These numbers mark the lowest homeownership level on record since 1999 and indicate a shift from home ownership to rental, as people still need a place to live.
According to Henry Cisneros, (President Bill Clinton's housing secretary from 1993 to 1997) "The rental market will be robust for the next few years."
Other Pros of Renting
Necessity aside, renting your home has other perks missing from the homeowner equation. Those living in rentals can more easily plan their budgets, as there will be no emergency home repairs to fund. Expenses associated with maintaining the property and the home are the burden of the landlord, not the renter.
Because of the real estate bubble bursting and the subsequent recession, Americans are in the position of reinventing themselves professional. Another great thing about renting is the short-term agreements associated with the living arrangement. That gives the unemployed the flexibility to expand their searches throughout a larger variety of job markets and the flexibility to end their rental agreement prematurely and relocated if necessary.
Buying vs. Renting
The mortgage meltdown did not just affect the home buying industry; initially the rental market was damaged as well. As more renters lost their job, they relocated to less expensive housing options such as moving in with a roommate or even back home to their families nest. That left landlords with plenty of vacancies in their buildings and a lack of revenue stream to pay their financial obligations. Many building managers started to lower their rent and even started offering incentives such as "get first month free" when signing long-term rental agreement contracts.
As more Americans opt to rent the roofs over their heads, expect the generosity of landlords to end. Simply put, supply and demand is positively impacting the rental industry and consumers should expect to see increases in monthly fees and less promotional opportunities looming on the immediate horizon. According to MPF Research, rents may rise between 4 percent and 6 percent in both 2011 and 2012.
Right now, the real estate landscape is flush with both affordable rental properties and homes for sales, however as the economy improves, prices will rise in both sectors. Unless you are able to snag a long-term rental agreement at rock bottom prices, because of the historically low mortgage rates and the surplus of highly discounted homes for sales you may want to consider buying a home.
The personal debate comparing buying a home to renting a property needs to start with an honest financial assessment of the situation. The first step should involve building a budget including total expenses and income. Using that information, crunching the numbers on a buy vs. rent calculator can provide even more valuable insight. However, if you are a consumer with the means and the desire to own your own home, buying now may be the best long-term strategy.
