If you’re on the hunt for a new home but you think you can’t afford a mortgage right now and assume it would be better to rent, think again. Rental rates are just as high, and you don’t even own the home or get to build equity. Rental rates spiked big time in 2021 and are continuing to do so in 2022.
Here are some reasons why buying is a better decision than renting right now.
Eviction Moratoriums Are Coming to an End
Eviction moratoriums that have been protecting renters throughout the pandemic are lifting. Those moratoriums have placed a big burden on many landlords and they’re looking to recoup their losses after two years of financial strain. Now that they can evict non-paying tenants, at least in most areas, landlords are hiking up the rents.
Landlords are Exploiting This Hot Housing Market
Because landlords know all about soaring housing prices, they’re raising their rents to take advantage of many potential home buyers who are being pushed out of the market due to such high competition. With low inventory and too many buyers, sometimes homes for sale can fetch 50 offers, all over asking and many waiving contingencies. Where do the other 49 people go whose offer didn’t get accepted? Many of them have no choice but to rent simply due to the lack of suitable homes to buy.
Private Landlords Are Few and Far Between
Many “mom-and-pop” rentals, usually offering lower rents and easier negotiations, are all but gone due to the strict rules of the pandemic. They had no choice but to sell their investments to large property management firms who were better able to weather the storm of eviction moratoriums and unpaid rentals. Those large companies are charging high rental rates and aren’t quite so forgiving as those mom and pop landlords were.
Rentals Are Now in Demand
Just like the housing market, the rental market operates by the laws of supply and demand. Early on in the pandemic, many landlords saw their tenants leave urban areas for the quieter and not-so-cramped suburbs. Now that people are heading back into the congested cities, nice apartments in highly sought after areas are in more demand. Even so-so apartments in so-so areas are commanding a big price.
These higher rental costs can make it difficult for potential homebuyers to save up enough money for a down payment on their own home.
Why You Should Buy Now
Here are just a couple of reasons why now is the time to stop renting and start buying.
- Home prices will stabilize: There will likely be more homes on the market this year than last, but don’t think that will result in lower prices. Most homes for sale are pre-owned, as new construction costs are still very high with the cost of lumber and other building supplies. As more and more Baby Boomers downsize, they will put their homes on the market, which could lead to some stabilization. The market will still be tight, to be sure, but at least it will be more balanced.
- You won’t waste money on rent: Did you know that the cost of a mortgage, insurance and taxes on a house may be lower than the rental costs of an apartment? When you’re a home owner, you enjoy tax benefits, you build up equity and you eventually own your own little piece of paradise. Why pay someone else’s mortgage every month?
Contact Berkshire Hathaway Premier Properties
To hook up with a buyers’ agent who can help you break out of the renting rut and look toward a future as a homeowner, contact Berkshire Hathaway Premier Properties at 713-862-0000.