Cool House! Hot Price!
My objective this week was two-fold: Find a great starter home in a rising neighborhood that would also illustrate how buying now makes more sense than renting. This 2 bedroom, 1 bathroom 900 square foot house is move-in ready at $599,000. The average rent in this area for a similar size property is $2,100/month. If you bought this home, the average all inclusive payments at today's interest rates would be around $2,900/month. Your owning the house plus the home mortgage interest tax deduction makes up the $800 difference!
Improving Economy - Source: Bloomberg 2015
About 5.2 million renters say they expect to purchase a house in 2015, up from 4.2 million a year earlier, a reflection of the improving economy, according to the Zillow HCI released this month. The share of renters aged 18 to 34 who want to buy grew in markets where job growth has been strong, according to the survey of 10,000 households in 20 cities.
While limited inventory, tight credit and down-payment requirements make it hard for many millennials to achieve the American Dream, soaring rents and the likelihood the Federal Reserve will increase interest rates later this year may drive more of them to explore buying, said Stan Humphries, chief economist at Seattle-based Zillow Group.
Humphries said he expects rent increases to outpace price gains by the end of the year as higher mortgage rates limit affordability and the rental market remains tight. The U.S. rental vacancy rate hit a 21-year low at the end of last year, according to the Census Bureau, giving landlords leverage to charge more.
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