Best of Times or Worst of Times for Renters?
Few have emerged unscathed from the mortgage mess. But you’d think that if you were renting rather than owning that you could just duck and wait until things settle down, right? It depends. In some communities, high rates of foreclosure have turned so many former homeowners into renters that rents have been pushed up. To make things worse, good tenants have found themselves served with eviction notices when their landlords default on the property and a lender takes possession.
At the same time, lenders have tightened underwriting standards, requiring better credit scores, higher income, and larger down payments before granting mortgages. So those who might have become homeowners as home prices fell are finding that home ownership remains just out of reach. Finally, fear of making a homebuying mistake has kept a sizable portion of the population from buying — pushing rents up.
Other locales are different. Where there was rampant speculation, many bought houses intending to flip them for a profit and never planned to hang on to them or make payments for any length of time. These markets have an abundance of rental properties available as owners look for some way to offset mortgage payments on property they can’t sell. And that is keeping monthly rents down.
A number of factors determine if you can expect to have trouble finding or affording a rental in your town. Growth in employment, construction, income — as well as existing housing inventories — can influence whether buying or renting is the better decision. One thing, however, is fairly certain — housing prices are famous for bouncing back, and rates, near historic lows right now, are far more likely to increase in the future than decrease. If you can get approved for a loan and afford the mortgage, consider making a move now. The low prices and interest rates could present a phenomenal opportunity to those who can take advantage of it.
Tags: , buy or rent?, buy vs rent, foreclosures affect renters, housing prices, mortgage, mortgage rates, renters
