Charleston, SC first-time
home buyers in 2014 are faced with a question that hasn’t changed for
generations: is it more practical to buy right now, or to continue to rent?
Over the past few years,
buying has been the easy choice. Nationally, in 2013 it cost 35% less to own a
home than to rent according to that year’s study by real estate website Trulia.
That despite rising house prices and mortgage rates. But that was last year,
and the experts have been pretty unanimous in predicting that interest rates
will continue to rise—ending up somewhere near 5.5% by 2014’s end (per the
National Association of REALTORS®).
In the face of higher
interest rates and house price tags, will 2014 be the year when renting becomes
more affordable than buying?
While first-time home buyers inCharleston, SC are faced with increasing house prices and mortgage rates,
renters also find another national trend: higher rents. Rents have been on the
rise for the past few years, with continued increases expected throughout 2014.
According to Axiometrics, the folks with the latest data, apartment rents are
on course to rise by 3.04% in 2014. Research firm Reis puts the expected rise at
3.15%— and both say the causes are the potent combination of tight supply and
rising demand. Whenever the economy improves, each incremental gain puts even
more pressure on rents—which acts as an offset to any financial benefits of
renting versus owning.
Where does that leave our
typical Charleston first-time home buyers? Most recently, national averages
show it is still about 21% cheaper to own rather than rent. According to the
Trulia study, by fall of last year, the earliest tipping point at which it would
have become more expensive to own rather than rent would have been expected to
occur if interest rates hit 5.2%—but only in San Jose, California—and only if
rents had remained fixed (which didn’t happen, even in San Jose). Nationally,
out here in the real world, Tulia admitted “mortgage rates will not tip the
housing market in favor of renting over buying until rates hit 10.5%...”
Charleston area first-timehome buyers can be a bit more confident as they take in one more piece of
information from the real world of April 2014 (no matter what the experts
predicted): over the past few weeks, national mortgage interest rates have been
edging down instead of rising! That may well change direction again (probably
will), but for now at least, I have to say that it’s a pretty clear call in the
spring of 2014: time to get pre-qualified!
That’s the first-time home
buyers’ Step One…it also happens to be an ideal time to give me a call!
Interested in selling your Charleston area home? Visit: www.jeffcookrealestate.com
-Jeff Cook
Jeff Cook Real Estate
Charleston, SC
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