Buying a Home? Consider COST not just Price
See the article and other great statistics and information here -Buying a Home? Consider COST not just Price.
So this is part two but to me for the North Shore this is the most important piece of the puzzle.
There is no inventory right now! Homes that are priced right are selling – immediately at or above asking price. It is common for sellers to get multiple offers. This weekend I saw open houses with 50+ attendants and agents receiving 8 or 9 offers on properties.
So, what does this mean to you as a seller? MORE MONEY, BETTER TERMS, LESS TIME. Who could ask for more?
Here are the details…. 3 Reasons to Sell Your House Today! (Part II).
by THE KCM CREW
- Trulia reported this week that homeownership is 45% cheaper than renting in the United States. Jed Kolko, Trulia’s Chief Economist explained:
“Homeownership is cheaper than renting in all of the 100 largest metros, by a wide margin. Despite the recent price rebound, rents continue to rise faster than prices, and mortgage rates are near record lows.
Homeownership makes the most financial sense for people whose strong credit scores let them snag the lowest mortgage rate and who get the biggest benefit from deducting mortgage interest and property taxes from their income taxes.”
(Trulia’s methodology is explained here.)
This news did not come as a surprise to us as we have reported that today’s rental market definitely favors the landlord. Below is a graph of how rental prices have increased recently and where they are projected to go over the next few years based on a report from Marcus & Millichap.
It cost more to rent than own right now. And you don’t get any of your rent back in the future. History shows us, in the long term, you can build equity in a home. Dr. Ken Johnson earlier this year explained in a post on this blog:
“It appears that homeownership creates extra wealth mainly through its ability to force owners to save rather than through property appreciation. Thus, homeownership appears to be a self-imposed savings plan, which through time leads to greater wealth accumulation as compared to comparable renters. In short, buying a home makes Americans save.”
The Joint Center for Housing Studies at Harvard University released a study last year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners:
“[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”
What Does This All Mean?
We believe David Shulman, senior economist with the UCLA Ziman Center for Real Estate said it best:
“The American Dream of homeownership may be comatose, but it is not dead, and the wake-up call will come in the form of higher rents.”
If you are thinking of making a move – check this out – Inventory is so low – well priced homes are going quickly for top dollar.
Jed Kolko, Trulia Chief Economist
Trulia‘s Chief Economist names Houston andSan Francisco as the nation’s healthiest housing markets heading into 2013. Why? These two markets have solid fundamentals, without the extreme price swings of Las Vegas,Phoenix, or Detroit.
Along with our take on what’s in and what’s out for housing in 2013, I’ve got my eye on 10 “healthy” housing markets with solid fundamentals. The healthy markets that made the list have strong job growth (Bureau of Labor Statistics), which bodes well for housing demand; low vacancy rates (U.S. Postal Service)–low enough to encourage new construction, but not so low that inventory and sales are restrained; and low foreclosure inventory (RealtyTrac), since foreclosures tend to hold back recovery.
But why, you might ask, aren’t rising prices included as part of our definition of healthy local housing markets? Because many of the markets with the largest price gains in 2012 were rebounding from huge price declines during the bust, but they still have weak fundamentals, such as high vacancy rates, large foreclosure inventories, or slow job growth. For instance, Las Vegas andPhoenix both have high vacancy rates and large foreclosure inventories going into 2013, despite having year-over-year asking-price increases of 14% and 27%, respectively, according to the November Trulia Price Monitor. AndDetroit has a sky-high vacancy rate and is suffering job losses, even though asking prices in Detroit rose 10% year-over-year. Just as losing lots of weight might be part of an unhealthy cycle of yo-yo dieting, big price gains aren’t necessarily a sign of a healthy housing market if they’re being driven by a post-crash rebound, rather than solid fundamentals. That’s why Las Vegas, Phoenix, and Detroit aren’t on the healthiest-markets list for 2013.
The envelope, please:
|The 10 Healthiest Metros for Housing in 2013|
|San Francisco, CA|
|San Antonio, TX|
|Peabody, MA ***|
|Fort Worth, TX|
|Among the 100 largest metros.
***Note that Peabody MA refers to the Essex County metropolitan division, which includes the suburbs north of Boston, with a population of 740,000.