Photo: Flickr via waltimo
With mortgage rates at record lows and a rental market flooded by previous homeowners, most experts agree now’s the time to transition from renter to buyer.That’s easier said than done.
Today’s reality is that consumers left battered and bruised by the recession aren’t exactly the most attractive candidates for home loans – especially at a time when lenders are choosier than ever with loan applicants.
The result is a new wave of frustrated renters, says Citi Habitat President Gary Malin. Edged out of the housing market by foreclosure or turned down by lenders, they’re left with no choice but to rent at some of the highest rates in years.
In Manhattan alone, the first quarter of 2012 brought the highest monthly rent average since 2007, tipping past the $3,400 mark, according to the brokerage firm’s latest data. The city’s vacancy rate is hovering just about the 1 per cent mark.
“In Manhattan, in general the housing market has yet to fully recover,” Malin told Your Money. “Look at the cost of acquisition and the cost selling. If you don’t have a long enough time, you might not get your money out.”
For renters hoping to make the transition into buyers, getting caught up in the hype over the buyer’s market now probably isn’t the wisest move.
When you factor in the time it takes to save for a downpayment, nail down your ideal neighbourhood and find a space you can afford, the process can take as many as six months, Malin says. Sounds like ages, but keep this in mind: if you’re hoping to see a return on your investment, most real estate experts agree homeowners should expect to stick around for at least five to 10 years.
That’s where people often make mistakes.
“You should buy as your budget allows, but you want to have room to grow in your apartment,” Malin says. “I don’t think people take long enough to think about where their lifestyle will be in five years … I’ve seen a lot of people jump into buying apartments because they feel like it’s great but they have buyer’s remorse.”