On August 18th, KIRO TV News reported that it may be less expensive to own than rent, turning to Realogics Sotheby’s International Realty‘s (RSIR) CEO & President Dean Jones, in addition to broker Cassie Daughtrey for the latest trends. Reporter Natasha Chen describes that “tenants are spending an unprecedented share of their monthly income on rent,” citing analysis by Zillow, which suggests that renters are typically spending nearly 10-percent more of their monthly income on rent than they are on mortgages.
In a print version of the article, Dean Jones says that given the current anemic inventory and high demand, prices will continue to climb as new inventory is slow to come onto the market. “The reality is many apartment buildings are now worth as much as they are as condominiums,” said Jones, adding that “while that’s all well and good for developers it leaves consumers with a lack of inventory to choose from. There are only about 60 resale condos for sale in downtown Seattle right now about about half of the new condominiums being built are presold. If just 5-percent of the new residents that moved into a new apartment building in the last few years decided to buy, we’d absorb all of the available inventory for sale and prices would escalate even further. I think that time is coming.”
That’s why many renters have decided to leap into homeownership, as Daughtrey revealed in her handling of four first time homebuyer deals just last month. As she told KIRO TV, “If you’re going to remain in one location for more than two or three years, it pays to own.” She also said “sellers are harvesting equity they’ve built up over the years and many times they are even adding value through thoughtful renovations, which can dramatically improve the market value. Besides, there are meaningful tax advantages and while it takes some effort, it’s smart to build your own portfolio instead of your landlords.
Mortgage Banker Nancy Glover of Caliber Home Loans, also addressed a few “fact vs. fiction” points that many future purchasers hold:
- Fiction: You need at least 20% down to purchase a home!
- Fact: There are loan programs available with as little as 3%, 5% and 10% down.
- Fiction: I need to save up all of my own money!
- Fact: You can use gift funds or a loan from your own retirement account for the down payment.
- Fiction: I won’t be able to qualify for a loan due to difficult lending requirements!
- Fact: Lenders are now offering more lending options than before to help you get a loan, it’s easier than you think!
Further, Keith Lashley, also a Mortgage Banker with Caliber Home Loans, offered the following piece of advice for prospective buyers: “mortgages are intended to be a leverage tool allowing borrowers to secure a preferred home at a preferred price today vs. waiting to buy in a year or two. I respect the intent to have less debt and pay down a mortgage as quickly as you can but the reality is most can’t save as fast as the market is appreciating. So by waiting to buy, it’s actually resulting in less purchasing power and it would seem less selection to choose from. It’s ironic but you may actually be able to save more money as a homeowner and pay down the mortgage quicker because you enjoy income tax credits.”