In many parts of the country, the rental market has steadily picked up over the past few years. There are a number of reasons people are renting instead of purchasing. The burst of the housing bubble caused a significant loss of equity in a home – which translates to a lack of downpayment for many potential buyers. Other sellers were underwater on their mortgages when they sold, and in addition to losing equity, also had to dig into savings to pay the difference in order to close the sale of the home. Distress sales have left potential buyers with marred credit, in addition to the lack of funds to use to purchase. That marred credit has caused mortgage investors and lenders to tighten their strings and be a bit more cautious with loaning money out to prospective homeowners. And then there are those potential buyers who are “waiting in the wings” for the housing market to stabilize. Renting, until they feel that the time is right to reinvest in the real estate market.
All of these factors have helped create a rental market with high demand in many areas. As the law of economics has it – the higher the demand, the higher the price. Most markets have experienced increased in monthly rents. Without a checks and balance system, like appraisals in the buying segment, tenants are more apt to pay more for, if a property is in an area that they want to live in, or if the landlord is willing to accept the risks of a tenant’s damaged credit. With that being said – is it time for you to now consider buying a home? Instead of signing another lease?
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