Should I Rent?
Should I Rent?
So many buyers are in a quandry over the past few months. Home mortgage rates have increased from 3.625 to 6.25% since January. Home prices have increased nearly 10% Since January. Every sign says a buyer should wait to buy a home.
Not so fast... It's very important to dig deep into the numbers and see where we were and where we are heading. Then, we can make a very educated decision to rent.... or not.
There are a few variables that come into play. Home prices, interest rates, inflation (and cost of living), institutional buyers, and rent rates.
Let's start with home prices. Home prices for the past 10 years have increased. In the past two years they have increased on steriods. What caused this? Low inventory and very low interest rates (helping buying power) helped buyers buy a home that was effectively overpriced. A home owner who owned a home was willing to buy at a premium because they just sold at a premium.
Interest Rate hikes have increased the amount per month a new home owner will pay on their new home. It also decreases buying power for the buyer. A 1% increase in interest means a 10% decrease in the amount a buyer is qualified for.
Institutional buyers have played a huge part in home prices going up. These companies are not worried about losing money and therefore are paying over listed priced. This is taking away inventory from home buyers...thus helping drive prices up. On the flip side...after a year of losing money on each deal they...