No one likes paying rent. Who wants to help someone else build equity in a house?
Get ready for rent to become even less enjoyable. Rents are climbing as the number of available rental units is declining, according to a report from research firm Reis Inc.
At the same time, the real estate market is overflowing with “for-sale” homes at rock-bottom prices. Could it be time for you to make a home purchase?
Rental supply is short, demand is high
If you’re a renter, you’ve probably noticed that rentals are getting tougher to find. And it’s not just a local phenomenon. Nationwide rental vacancies hit a 10-year low in the fourth quarter of 2011, falling from 6.6 percent to 5.2 percent for the same period last year, according to Reis.
The rental market is full of new clientele who have traditionally pursued homeownership. Foreclosures have pushed many former homeowners into the rental market, and many potential first-time buyers can’t meet today’s stricter mortgage standards.
The huge rental demand is inching closer to exhausting available supply. Builders are having trouble getting loans, so fewer new units are being built. A total of 37,678 new apartment units were completed in 2011, which is the lowest annual total in 31 years of Reis data.
Short supply and huge demand is great news for the nation’s landlords. Backed by full properties and long waiting lists, landlords can put the squeeze on renters in the form of higher rent. Rents climbed to their highest levels since 2007, at $1,009 per month (fourth quarter 2011 nationwide average), according to Reis.
Homebuyers in short supply
As rents rise, housing prices remain in decline. The national median existing-home sales price fell to $166,100 in 2011, according to the National Association of Realtors. The 2011 figure represents a 3.7 percent decrease from the 2010 figure, making it an undeniable buyer’s market.
It’s a great time to buy a cheap home, but qualified buyers are scarce. In the face of the housing meltdown, many lenders have tightened requirements and allow only the most unblemished applicants to obtain new mortgages.
As a result, homeownership rates continued their seven-year decline and fell to 66 percent in the fourth quarter of 2011, according to the U.S. Census Bureau.
Is it time to buy?
While many loan programs are heightening restrictions, VA loans continue to offer relaxed qualification standards to military buyers. Less stringent credit score and income requirements can make a well-timed purchase possible for veterans locked out of other financing options.
Buying a home certainly isn’t the perfect route for everyone. Take a look at your finances, and talk to a VA lender about your options. If you’re in good financial position to purchase a home, now may be the best time ever to make the move from renter to homeowner.
Photo courtesy of nikcname