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Consumers Benefit from a Renter’s Market
More and more consumers are recognizing that at least
for right now they are better of financially renting
than buying. This is certainly a departure from the past
when most consumers realized that the best financial
option would be to buy rather than rent so that their
money would go toward creating equity in a home.
Today that is no longer the case; however. While rents
have continued to rise in many locations, consumers are
still finding they are often able to rent for less money
than what they would pay for a monthly mortgage payment
on a comparable property. In some cases, renters are
able to save between 40% and 50% by renting instead of
buying.
One of the reasons for this is that in some locations,
property values rose quite steeply. Today, buyers who
snatched up those homes without blinking have discovered
they must now sell. The problem? They need to sell the
homes at the prices at which they purchased them two
years ago to recoup the balance they owe on the
mortgage. Renters just are not willing to pay more money
than a home is worth.
Even renters who are able to qualify for mortgages just
do not feel as though they are getting enough home for
their money, especially when they can often rent a
comparable or even larger home for less money.
As a result of the shifting market, many experts are
quick to point out that today the market is no longer a
seller’s market and it is not really a buyer’s market
either. Instead, it has become more of a renter’s
market.
Other renters are holding off on the idea of buying
because they are concerned that prices have not yet hit
the lowest point. They are primarily concerned that if
they purchase a home today it may not be worth the same
amount just six months from now. They feel it is far
more prudent to wait and see exactly where the housing
market will land before they consider buying a home.
Other renters are concerned about the upcoming hurricane
season. Few have forgotten the hurricane season of just
two years ago that devastated many areas. Homeowners in
those areas, especially those without insurance, have
yet to recover.
While some areas are experiencing a deficit in supply of
rental properties, in other areas homeowners have
recognized the wisdom of holding off on selling their
homes. They, too, are reluctant to sell their homes now
when it seems more prudent to wait and see when the
market will stabilize. To help make ends meet, many of
these homeowners are willing to rent out their homes to
the scores of renters lining up to take advantage of the
opportunity. Even homes that are on the market for sale
are also available for rent. While renters must accept
the reality that the home in which they are living must
be available for showings, they still feel the trade-off
is quite worth it.
Would-be investors who attempted to get in on the quick
profit potential of flipping homes have also discovered
that it makes more sense to rent out their properties
right now instead of trying to selling them. In some
cases, investors are discovering they simply do not have
any other options when they must meet mortgage payments
every month and are unable to sell their properties. In
some cases, this means renting the properties at a loss,
creating a negative cash flow.
In fact, this situation has become so much of a problem
that landlords in certain niche markets are finding they
must cut rents in order to create even a small amount of
cash flow. These investors have quickly discovered that
it is far better to rent right away at a loss than wait
several months to try and attain the amount of rent they
really need. Although landlords are often upside down on
most of these properties, renting them out has proven to
be the safest method; at least for now.
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