As we steadfastly approach the end of Q1 for 2012, we wanted to revisit a blog we wrote last year that generated a lot of comments and questions from our clients and supporters. For those of you who missed our blog entitled, “Metro Atlanta Real Estate Market: Owning vs. Renting” back in August of last year, never fear, we are putting the contents from that blog in today’s post.
The topic of owning versus renting is so relevant and important to so many metro Atlantans that we felt compelled to re-share our thoughts on the matter.
In the height of the Metro Atlanta real estate boom, individuals selling their homes commanded prices that yielded large return on investments and buyers were more than willing to pay these inflated prices. Fast forward a few years later and the real estate market is a completely different place. Gone are the days when home owners could walk away from a real estate transaction with the upper hand in price negations and enormous profits. We are currently experiencing what real estate experts call a “buyer’s market.”
The real estate market is similar to the stock market in that it is normal for the market to shift gears and switch from a seller’s market to a buyer’s market and vice versa. In other words, the current buyer’s market conditions will not last forever. If you ever wanted to purchase a home for any reason, now is the time. The present real estate circumstances, such as historically low interest rates and low home prices have fostered an environment that have set up both current and potential real estate buyers for success.
Below is an in depth look at why NOW is the time to buy rather than rent your home in metroAtlanta:
Owning is less expensive than Renting in Metro Atlanta
The combination of all time low interest rates and unprecedented low home selling prices have made it possible for buyers to become a home owner for much cheaper than then current Metro Atlanta rental rates. In fact, Trulia recently came out with its rent vs. owning index, which shows it is currently more expensive to rent than own a two bedroom, two bath home in 72% ofAmerica’s 50 largest cities.
Another explanation of the current rise in rental rates and decrease in home prices is supply and demand. Due to the massive foreclosure crisis, thousands of Atlantan home owners were forced to sell their homes at drastically reduced prices. These former home owners have now become renters. This increase of renters has lead to an increase in rental prices. Conversely, the increase in foreclosures has lead to a dramatic decrease in home prices. Thus, the timing is now PERFECT for home buyers to take advantage of the current prime real estate environment.
Going, going, GONE. Low interest rates won’t last forever
Most experts do not expect the current low interest rates to last forever. Currently, potential home buyers can take advantage of historically low interest rates. However, factors such as impending mortgage reform and the fact that interest rates will increase as the economy improves come together to suggest that interest rates will eventually rise. Because the combination of both price and interest rates determine the overall cost of home ownership, it is imperative that anyone looking to buy real estate take advantage of the low interest rates while they are still available.
Mortgage Rate Reform: 30 year mortgage a thing of the past?
Over recent years, there has been a great deal of debate over the government’s role in assisting homeowners with home ownership. Many industry experts predict that if Fannie Mae and Freddie Mac’s roles in mortgage support are limited, it could be the end of the 30 year mortgage. The Obama administration wants to eliminate federal guarantees for home loans for all but credit worthy buyers. If a change such as this were to be implemented, it could make buying a mortgage more expensive. Thus, the 30 year, fixed-rate mortgage would not be as widely used as other mortgage types. Prospective home buyers should take advantage of the ability to lock in the incredibly low interest rates over the next 30 years.
In closing, renting a home is the equivalent of having an adjustable rate loan with no cap that will readjust with higher rental rates each year. By locking in the current low interest rates, potential home owners can guarantee that the price of their living expenses stays the same, year after year. With that being said, low interest rates and dramatically low home prices have set the stage for Metro Atlanta home buyers to enjoy the benefits of home ownership.
Give us a call at 770.405.0100 x 222 or email us at slymanfamily@comcast.net.
Slyman Real Estate GA 