“Many renters can, in fact, qualify to purchase a home. They may not realize it, but given the low down payment options that are out there, they can take a more serious look at home ownership than they probably expect.” Danielle Hale, managing director of housing research for the National Association of REALTORS® (NAR), said.
In fact, even with housing costs on the rise and steep closing costs and other taxes on buying a home, in most areas of the country it is more affordable to own a home than it is to rent one.
For the past two years, NAR has been measuring home-owner and non-owner sentiment in housing as part of the Housing Opportunities and Market Experience (HOME) survey.
Updated quarterly, NAR tracks data regarding things like home ownership intent or desire. To see if people think now is a good time to buy a home or if it makes sense to stop renting and buy or to continue renting.
The people polled in this survey are the same average Americans who drive the housing trends and markets today. Therefore, the HOME survey can be very beneficial when deciding what to expect next and help shape important decisions.
The survey shows that half of all renters in America feel like they can’t afford to buy a home.
“Some of that we found is attributable to student loan debt and they don’t feel comfortable taking on additional debt,” said Jessica Lautz, managing director of Survey Research and Communication for NAR’s research division. “The other aspect of it is the misperception of down payment options.
Thirty-nine percent think they need more than 20 percent down to purchase a home. Eighty-seven percent think they need more than 10 percent. There’s a gap in knowledge between low down payment options and what they believe they need.”
Hale added that the biggest problem is a lack of education on how the process works.
“We know that in the long run homeowners accumulate wealth as they pay down their mortgage, and home ownership remains part of the American Dream. Our data shows that right now it’s probably more affordable for renters to buy a home than they realize.”
“You can put as little as 3.5 percent down using a Federal Housing Administration loan. A lot of these people could afford a monthly mortgage given the prevailing home prices…”
Is it more affordable to own than rent?
It’s something that many REALTORS® want to see more people understand and be a resource to help them learn the ins and outs of the home buying process.
NAR has looked at this data in the top 100 metropolitan markets in the country and in more than half of them, it is still more affordable to own than rent.
Hale said that nationally, rent is increasing about 4% annually, but that if you isolate that to specific metropolitan areas, the rise in rent can be 25% or even higher – which really can put renters in a financial bind.
“Non-owners typically are younger (59% are under 35) and they typically have a household income under $50,000 annually,” said Hale.
And while more than half of non-owners think now is a good time to buy a home, that sentiment has dropped from 63% to 55% in the past 12 months, meaning the rising cost of living is adversely affecting the dream of owning a home on millennials.
Which is why they should seek out help in the form of real estate experts who can help them to understand their options, show them listings available within their budget and put them in touch with mortgage experts who can help them understand what their budget is.
(full, original article here by Anthony SanFilippo)
