Home ownership beats renting, if you can get a loan

Tight lending standards, coming up with a down payment and the carrying costs of owning a home (taxes and insurance) force many into a rental unit even if it is "more expensive" than buying.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - A new report says the cost of home ownership is a better deal than renting in three out of four U.S. cities.

It assumes buying a home is easier than it is to rent and, as many consumers discover, it ain't.

Tight lending standards, coming up with a down payment and the carrying costs of owning a home (taxes and insurance) force many into a rental unit even if it is "more expensive" than buying.

"Prospective homebuyers, who are ready and qualified to buy, face an uphill battle despite falling home prices and record-low mortgage rates," said Ken Shuman, Head of Communications at Trulia.

Shuman added, "Today, many banks are actually less enthusiastic about approving residential mortgage applications, which has dragged out the home buying process. Until a middle ground on lending practices can be met, many highly-qualified buyers may be forced to be renters by choice for now."

Trulia's Summer 2011 Rent vs. Buy Index says in 74 percent of major U.S. cities offer owner-occupied housing that's cheaper than a rental unit.

The report compares the cost of buying and renting a two-bedroom apartment, condo or townhome in the nation's 50 largest cities.

The top cities with a better deal for ownership were Las Vegas, NV; Detroit, MI; Mesa, AZ; Fresno, CA; and Arlington, TX.

Rents were the better deal in New York, NY; Fort Worth, TX; Omaha, NB; Seattle, WA; and San Francisco, CA.

Trulia's price-to-rent ratio is the median listing price divided by the annualized median rent. Buying is less expensive than renting when the ratio is 15 and under, renting is less expensive than buying whine ratios are 20 or higher.

There is a grey area between the rent versus buy spectrum. Personal circumstances, including your tax bracket, may make buying a home a better deal in Oakland, CA; Austin, TX; San Jose, CA; Memphis, TN; Boston, MA; Los Angeles, CA and Portland, even though rents are relatively cheaper.

"Many aspiring homeowners are on the fence about renting and buying in today’s market. Should they take advantage of falling home prices and low borrowing costs, or should they continue to rent until the economy stabilizes?" said Shuman.

"Price alone should never be the sole factor in deciding to purchase a home. Instead, buyers should first ask themselves if they plan to live in the home for at least seven-to-10 years, could make monthly payments on the house, and have enough cash in the bank for a down payment and an additional six to eight months worth of mortgage payments. If you can answer 'yes' to each of these questions, then the cost of buying a home definitely outweighs renting in most cities," he added.

Also, buying a home makes more sense in cities overloaded with foreclosures, but that could soon change, says Trulia.

In Miami, for example, it is still less expensive to buy, but a mini-buying boom created by investors and foreclosure freezes have caused its price-to-rent ratio to jump by 112 percent from 6 in January to 13 in July.

Meanwhile, recent job gains in the auto industry have not countered Detroit's falling home prices. For now, the city has experienced a setback since January with its price-to-rent ratio dipping 39 percent.

Las Vegas, continues to be the best place to buy instead of rent for the past six months, but investors are snatching up most of the distressed properties there.

"While recent stock market volatility on top of the slow economic recovery makes homebuyers nervous, it has not destroyed the American dream of homeownership," Shuman said.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Best back-to-school real estate investment cities

To help real estate investors considering university towns, Move.com recently released a list of ten college towns that can yield an A-plus investment Parents can use the data too, to save on the cost of college housing.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The cost of education comes with the cost of student housing, but savvy investors can make a real killing on investment properties in the right college towns these days.

"Housing demand in college towns is generally high and vacancy rates are usually low. Combine the supply and demand ratio with rising admissions and the five percent rise in rental rates expected by the end of the year, and rental property in college towns can be a smart option for the right investor," said Move, Inc. Chief Executive Officer, Steve Berkowitz.

To help real estate investors considering university towns, Move.com recently released a list of ten college towns that can yield an A-plus investment.

Parents can use the data too, especially if they are thinking of the cost of housing for a child for the next four to six years.

The right property, say a duplex or triplex, even a larger single-family home (SFH) property, could come with housing for the student and enough rental income from the other units or roommates to help pay for the acquisition.

Move selected college towns based on the leading universities featured in the U.S. News & World Report College Compass Best Colleges 2011. Move.com also considered the cost of a monthly mortgage payment (30-year, fixed-rate mortgage, 20 percent down) based on an areas' June median price for homes vs. the average cost of rent for both a two-bedroom and a three-bedroom rental unit for the same period.

Here's a sample of what Move.com found:

Boston, MA - With a median list price of $335,000 in June 2011, the Boston/Cambridge market yielded a $1,370 mortgage payment compared to rents ranging from $3,122 to $3,913 a month. Demand comes from 50 colleges including Harvard and MIT.

Nashville, TN - Nashville is home to country music and Vanderbilt University. Rents range from $949 to $1,020, but the mortgage payment is only about $770.

Chicago, IL - Home of the University of Chicago and the most searched metropolitan area in the nation on Realtor.com, Chicago has a median price that yields an $820 mortgage payment, compared to rents that range from $1,780 to $2,074.

Washington, D.C. - Given employment is booming, thanks to big government, a Georgetown University student could get a job and help pay the $1,530 mortgage payment, which is half the area rents, ranging from $3,086 and $3,214.

Houston, TX - Headquarters for Rice University, Houston offers homes that come with a $710 mortgage payment. Average rents range from $1,218 to. $1,478.

Other top markets on the Move.com list of top college towns for investors (or students' parents looking for a housing bargain) were, South Bend, ID; Atlanta, GA; Baltimore, MD; St. Louis, MO and Syracuse, NY.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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• National Offbeat News Examiner

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Volatile rental market could make, break homeownership plans

Right now, home prices continue to fall, but rents are on the rise and if you don’t know when to change horses — or don’t have the option — you could find yourself in the middle of the stream.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Volatile Rental Market Could Make, Break Homeownership Plans

The rent-vs-buy decision is more than a calculated comparison of financial costs.

It's also about timing.

Right now, home prices continue to fall, but rents are on the rise and if you don't know when to change horses -- or don't have the option -- you could find yourself in the middle of the stream.

The housing bust and subsequent economic downturn forced many homeowners to retreat to the rental market. For others, falling home prices prompted them to put off homeownership longer than expected.

Early into the bust, high rental vacancies made for cheaper rents and renting became an overnight sensation.

But that's changing just as quickly as skyrocketing home prices plummeted back down to earth.

Read full story: "Volatile Rental Market Could Make, Break Homeownership Plans"
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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• National Offbeat News Examiner

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Should you buy a home or rent one?

Joey "Jaws" Chestnut eats his
way to best-paid 'athlete' list

Dust off and crank up that rent-vs-buy calculator (We have three here to choose from). The housing market is mixed with some areas offering homes to buy that are cheaper than renting. Other markets yield better deals in the rental sector.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - It's time to dust off and crank up that rent-vs-buy calculator.

The housing market is mixed with some areas offering homes to buy that are cheaper than renting. Other markets yield better deals in the rental sector.

Trulia's Second Quarter 2011 Rent vs. Buy Index compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in the 50 largest U.S. cities and found buying a home has become more affordable than renting in nearly four out of five major cities.

On one hand, the growing level of distressed housing has helped push home prices down by a "double dip" factor to levels not seen in more than a decade. Low mortgage interest rates are also cooperating.

Trulia says buying a home is a better deal in Las Vegas, NV; Phoenix, AZ; Arlington, TX; Fresno, CA; Miami, FL and Mesa, AZ among other cities.

Even with home buying affordability better than it's been in years, unemployment remains high and qualifying for a mortgage is so tough rentals are feeling the pressure of displaced demand.

Renting is a better deal in New York City, NY; Fort Worth, TX; Kansas City, KS; Los Angeles, CA; Memphis, TN; and Seattle, WA, among others, according to Trulia.

The National Multi Housing Council's (NMHC) latest Quarterly Survey of Apartment Market Conditions for the first quarter this year found the "Market Tightness Index," at 90, as high as it's ever been.

The survey polls more than 100 CEOs and other senior executives of apartment-related firms nationwide and found that almost four in five respondents (79 percent) said markets were tighter (lower vacancies and/or higher rents) and -- for the first time ever -- not a single respondent thought conditions were looser.

A reading above 50 indicates improving market conditions, below 50 indicates worsening market conditions.

"These results show the apartment industry continues to do well even though the nation's overall rate of economic growth has slowed. This is driven largely by the increased appeal of renting generally but also by the large number of young people entering the housing market for the first time -- and young people are much more likely to rent than buy," said NMHC Chief Economist Mark Obrinsky.

For those going the rental route, a long term lease that locks in the monthly rental payment is the better deal because demand for rental housing is expected to increase, says Bruce Hahn, president of the American Homeowners Foundation.

"Boomerang kids, children who were forced to move back in with their parents, will be looking for their own place as they find jobs. Most don't have much in savings, and since lenders are requiring larger down payments these days, buying is not an option for most of them," says Hahn.

There's also a multi-generational movement among families and groups sharing to save money on housing purchased or rented.

The demand pendulum will ultimately swing back in the direction of home ownership, says Lesley Deutch Vice President at John Burns Real Estate Consulting.

She says as rents continue to increase and owner-occupied housing prices continue to fall or remain flat, for-sale housing markets will begin to look more attractive. Many tenants simply cannot afford a rent increase, and will choose to downgrade the quality of their housing or take on roommates.

Deutch says, as housing rents rise, housing markets with high single-family vacancy rates provide some competition for the rental sector. States with high vacancy rates include Nevada, Florida, Michigan, Georgia and Rhode Island.

Because the rent-vs-buy calculation varies by locality, consumers need to compare costs where they plan to buy or rent.

Several calculators can help.

• Erate.com's "Rent vs. Buy Calculator" is a down-and-dirty quick comparison of rent, insurance, and expected rate of rental increases vs. home buying costs, property tax costs, upkeep costs, insurance and selling costs, but also appreciation. Use this calculator as a starting point, to quickly determine which type of housing is best for you.

• Realtor.com's "Rent or Buy" calculator tosses in more variables, including the real estate agents commission, rate of inflation and homeowner association dues (if any) to get you even closer to a real comparison. Use this calculator to hone in on what housing is best for you.

• Federal Reserve Bank of Cleveland's "Buy a Home or Rent?" calculator is really a worksheet that provides a host of variables many calculators don't consider. Produced by O. Emre Ergungor, a senior research economist and Saeed Zaman a senior economic analyst, both in the fed bank's research department, this calculator is for those who are financial planning nit-pickers who want to get closer to the absolute rent-vs-buy bottom line.


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You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
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Even home owners choose renting over owning

"Footlong?" Okay. "Sub?" I wish.

In a recent survey about renting versus owning, homeowners made up the majority of the respondents -- by a factor of more than 2-to-1 -- and yet 76 percent of all those surveyed deemed renting a better deal than owning a home in today's housing market.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - With the chances of home value appreciation looking dim, the continued risk of foreclosure and the cost of maintenance growing as a home ages, maybe owning a home isn't such a good idea right now.

That's what U.S. homeowners seem to be concluding. In a recent survey about renting versus owning, homeowners made up the majority of the respondents -- by a factor of more than 2-to-1 -- and yet 76 percent of all those surveyed deemed renting a better deal than owning a home in today's housing market.

As a homeowner, it's simply tough to shell out maintenance and upkeep cash on a property that offers little if any equity to tap for the expense. And with so much uncertainty in the job market, homeowners aren't sure they can hold on to what they've got.

Even if ownership comes with the promise of appreciation over the long haul, renters just don't want to risk what homeowners are already suffering in the current economic environment.

A Harris Interactive Survey for the National Apartment Association (NAA) said the number of people who believe renting is better than owning right now is up 5 percent over the 2008 survey for several reasons.

• You've got news! News that really hits home. Right here: Survey: Even Homeowners Say Renting Is Best Move

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Landlord's market emerging

Women on Pill like baby faces

While renters need not plan on renting forever, they can gain an edge if they emulate a "career renter" by approaching the rental-housing search much like a professional goes after a top-notch job.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Remember when doom and gloom spread to the rental market?

Dust off your rental resume, make your lease application shine and suit up for your "rental career."

It's becoming a landlord's market again.

The National Multi Housing Council's Market Tightness Index, which measures changes in occupancy rates and rents, rose sharply from 38 in October 2009 to 81 in April this year -- the highest figure in four years and the sixth straight increase in the measure.

RealFacts found the national average rent for all sizes of apartments was $943 for the first quarter this year, in its most recent national survey of nearly 13,000 apartment complexes with 100 or more units. That figure is up from $932 in the fourth quarter.

While renters need not plan on renting forever, they can gain an edge if they emulate a "career renter" by approaching the rental-housing search much like a professional goes after a top-notch job.

The idea is to be organized, serious and professional in both actions and appearance to demonstrate you will be a good steward for the landlord's property.

Here's how.

You've got news!...News that really hits home. Right here:

"Renting? It's a Good Time to Be a Landlord"

More landlord/tenant news that really hits home.

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Lower rates opens doors for refinancing homeowners, home buyers

Credit card squeeze continues

If you purchased a home a year ago, take a look at how much you can save by refinancing. If you are renting, take a look at how much less you can pay per month to own a home. The American Dream is alive and well.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If you purchased a home a year ago and have the equity and creditworthiness to swing it, a refinance today could save you hundreds of dollars a month, thanks to lower interest rates.

Or, if you are in the market to buy a home, lower interest rates and more affordable prices could give you a mortgage that's hundreds of dollars lower than your rent.

Freddie Mac's Primary Mortgage Market Survey last week put the average fixed interest rate for 30-year conforming mortgages at 4.91 percent. In California it was 4.88 percent.

Last year at this time, the 30-year fixed rate mortgage (FRM) nationwide averaged 6.14 percent.

On a $500,000 mortgage, considered a "jumbo conforming loan," expect to pay about a quarter percent more, says Michael D. Rodriguez broker owner of Platinum Capital Mortgage And Real Estate in Salinas, CA.

So at 6.39 percent a year ago, the mortgage (principal and interest) payment on that $500,000 loan would be about $3,124 compared to about $2,733 now for the cheaper 5.16 percent mortgage, a hefty monthly savings of nearly $400, according to Erate.com mortgage calculators.

Put another way, $4,800 a year, is just about enough to cover property taxes, make almost two mortgage payments or perform some equity-boosting home improvements.

Rodriguez says for conforming level loans at or below $417,000, he's seen fixed rates as low as 4.25 percent, with a point thrown in. Each point equals one percent of the financed amount. Riskier loans that come with a fixed rate for five years are as low as 3.875 percent, but they could adjust up drastically after the fifth year.

Freddie Mac also said the 15-year FRM averaged 4.36 percent, down from 5.81 percent a year ago.

The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 4.29 percent this week, down from 5.98 percent a year ago. The one-year Treasury-indexed ARM averaged 4.46 percent, down from 5.33 percent in 2009 at this time.

"These are the lowest rates I've seen in 18 years. There are 25 percent more eligible buyers than last year because of lower rates and lower home prices," Rodriguez said.

He also said because rents have risen in the past year, some buyers could land a monthly mortgage on a low-end priced home that's as much as $350 to $500 cheaper than rent.

"And then they get the $8,000 tax credit. That's quite a deal," he added.

Both home buyers and owners who want to refinance also could have some time-based wiggle room to shop around and dicker for the best interest rate deal.

"Keeping rates at historically low levels for a sustained period of time has to remain a cornerstone of Fed policy until the economy gets back on track," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA based interest rate tracker and financial information publisher.

"I don't suspect rates will begin to rise until we see at least three consecutive months of solid employment growth," she added.

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
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• National Real Estate Examiner

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Bay view Monterey, CA becomes renters' market

The troubled housing market has spawned a rush to rent at a time when rents are flat or falling, but Monterey County renters can't rest on their laurels.

Monterey County is a renters' market.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The troubled housing market has spawned a rush to rent at a time when rents are flat or falling, but Monterey County renters can't rest on their laurels.

Finding the best rental deal still requires market savvy and attention to the details of the rental home search.

"It's a great time to be a renter. There are lots of choices. You get more bang for your buck than in past times," says Jan Leasure, managing broker of Monterey Bay Property Management which specializes in managing single-family homes, condos, and apartment buildings in Monterey County.

Leasure says rents have been squeezed by the growing supply of new rentals stemming from foreclosures, unsold new homes and homes left behind by those moving out of the area.

In December, the median price of single-family homes in the area was $255,000, down a whopping 56.4 percent from a year ago, according to the Caliornia Association of Realtors (CAR).

Leasure says the oversupply of rental housing has pushed rents down five to 10 percent in the past year.

Leasure's data is based on anecdotal evidence from owners of single-family homes, condos and smaller rental complexes, which make up the bulk of the residential rental home supply in the county.

On the other hand, Novato-based RealFacts says as of the last quarter of 2008, the average rent for the county, $1,220 a month, rose nearly 8 percent, up from the average $1,131 monthly rent during the last quarter of 2007. The average rent in Salinas, $1,180 during the last quarter of 2008 was up 8.4 percent.

However, RealFacts' data is based only on larger apartment complexes -- those with an average 255 units per complex. There were only 28 properties throughout the county (17 of them in Salinas) that fit that data point. RealFacts' average rent data also includes a wide range of individual rental unit sizes from studios to three-bedroom townhomes.

Leasure says larger properties don't feel market pressures as quickly as smaller units, but you can expect those rents to soon soften. Occupancy rates fell nearly 1 percent in the past year in Salinas.

"If all of a sudden there's one vacancy in a smaller complex for three or four weeks, the impact on the owner is a lot more than one vacancy out of 255 units," Leasure explained.

"We manage in Salinas as well as on the Peninsula and the trends we se are much the same," she added.

Even with trends pointing to ever more favorable conditions for renters, that doesn't mean its time to shirk hard bargaining. Given the current credit squeeze, a rental home, for many, could be the shelter of choice for some time.

Renters need to negotiate for the most affordable housing they can find.

Here's how.

• Approach your rental-housing search like a job search. Be organized, serious, and professional in both actions and appearance so that you stand out as the best applicant.

• Tell everyone you know you are looking for an affordable rental home and what you want in a rental home. Use newspaper classified ads, renter magazines, and the Internet for listings. Check listings first thing every day. Call early. Leave a cell or other number where you can be quickly reached. Respond quickly when a landlord calls you back.

• Know what you really want and don't want in square footage, rooms, housing type and shop that market. Be flexible when it comes to amenities and concessions. Be prepared to decide on the spot and be prepared to leave a deposit and/or credit check fee.

"Most landlords and managers want cash or a cashier's check for the deposit/credit check fee, so they know they have good funds," Leasure said.

• Carefully vet and contact your references ahead of time to be sure your information on them is current and that you have their permission to use them as a reference.

• Keep your credit and finances in good standing. Obtain a free copy of your credit report from the one and only federally-sanctioned AnnualCreditReport.com. Examine it, correct any errors, and make sure what you say in the rental application is consistent with what the landlord will see on the credit report.

• Likewise, any data compiling agency, including major rental screening operations regulated by Fair Credit Reporting Act (FCRA) are required to give you free access to your data. If a report isn't free, purchase it.

• Be prepared with all the information you need to complete a rental application. That includes, full, prior addresses, bank account and credit card numbers, and references. A pre-completed rental application form may be acceptable. If not, it is a good way to compile your information for on-the-spot easy transfer to the landlord's application.

"The most commonly missing information on an application to rent is the contact information for past landlords. That is one of the most crucial pieces of info needed to process the application," Leasure said.

• Consider preparing a renter's resume. Like a job resume, a renter's resume is a chronology of your rental life and helps you stand out as well-organized and prepared.

"Prepare a written explanation of anything that needs explaining, bad credit, a foreclosure, a bankruptcy, an unlawful detainer action. Attach it to your resume. Landlords and property managers respect honesty," Leasure said.

• Lock in your rental costs by negotiating for the longest rental contract your lifestyle permits. Don't rent long-term if you know you soon could be relocated or will have to move. Any savings you hoped to enjoy from a long term contract could be lost in costs to break the contract.

• Before signing on the dotted line, understand the terms of the contract, the monthly rent, due date, deposits, required care and upkeep, community or house rules and any other details. Get help with anything you don't understand.

• Learn more about rental screening from ConsumerAffairs.com's "Behind The Screen Door" series.

• Buy a vacation rental!
• President Obama's 'career renter' moves

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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When It's Not A Good Time To Buy

The popular refrain, "It's a good time to buy," may be good advice for most consumers some of the time, it's not good advice for all buyers all of the time.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime.

Deadline Newsroom - Maybe you should be perched high and hanging tight up there on the fence with the rest of the crows cawing about all the reasons not to buy a home right now.

Renting could be a better deal, but that's your personal decision to make, not your real estate agent, your mortgage broker or your landlord.

Contrary to the popular refrain -- voiced even as aftershocks rumbled through the Loma Prieta, CA epicenter, repeated before Hurricane Katrina's swamp waters receded, and echoed even now as home prices crumble -- it's simply not always a good time for everyone to buy.

The new "Buying Your First Home," (Nolo, $24.99) is 99.9 percent about buying and keeping your home, but not without recognizing conditions that should keep you out of the owner-occupied housing market -- if only temporarily.

For starters, the sheer cost of owner-occupied housing is often overlooked in the finger pointing blame game now being played out as the housing and mortgage markets slip into darkness.

Fast rising prices compelled many buyers to buy before prices zoomed out of sight. Home prices rose an average of more than 50 percent nationwide in the past five years with some states experiencing home price appreciation jumps of 70, 80, 90, 100 percent or more during the same period, according to the former Office of Federal Housing Enterprise Oversight (now the Federal Housing Finance Agency)

While many homeowners today are getting the boot because they were sold on risky mortgages that ended up biting them in the assets, nearly as many simply bit off more than they knew they could truly afford, hoping for appreciation to bail them out.

In 2006, 36.9 percent of all mortgage holders, up from 2005, spent at least 30 percent of their gross income on housing. That means they are living close to their financial edge. One financial shift, say, a lost job, medical emergency, new baby or an interest rate adjustment and they could lose their footing.

Renting could put you on firmer ground.

While you won't enjoy the tax saving and equity gaining benefits of owning a home, a long term lease can let you lock in housing costs at a level you can afford.

Home ownership isn't just getting in, it's staying in by paying insurance, property taxes, maintenance or homeowner association dues, as well as the monthly mortgage and other costs.

Do the math. Learn the true cost of homeownership, from all the costs on the settlement sheet to the cost of driving to work vs. the cost of renting housing near your workplace.

"Buying Your First Home" recommends Rent Vs. Buy calculators available on the MyFICO.com; QuickenLoans.com and GinnieMae.gov Web sites as information boosters.

"Buying Your First Home" says you likely won't need to make the calculations and probably shouldn't buy if:

• You plan to move from the area within the next few years. During the last boom, you could buy and sell in six months to a year in many markets and recoup your buying and selling costs and still have enough cash left over to buy again. That's no longer the case in a growing number of markets where home values are evaporating. When the time comes, it's also easier, logistically, to move out of a rental home than a home you own and must sell.

• You are inflexible. Buying is better suited for you when your life is on a steady course. If you are still in your globe-trotting youth and out to see the world, unless you want to also manage house swapping or renting, buy when you've settled down.

• You expect a job change or income reduction. Similarly, if you plan to earn enough money to return to college, become a Hollywood celebrity or join the Las Vegas poker circuit, home ownership probably isn't for you. You can, however, opt to co-own, buy well within your means, say a tiny condo in an affordable community, or use some other affordable home-buying strategy.

• Buying will cost far more than renting. Again, do the math. Some high cost housing markets have gotten so expensive renting makes sense based solely on the mortgage vs. rent difference.

It's a good time to buy when your finances, planning, goals and lifestyle mesh with the financial responsibilities required for home ownership.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's news that really hits home!

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