Buying still makes sense for most people

Rising Rentals and Down Payments: Two Reasons to Buy Now


Posted on May 24, 2011 by Realty Executives



It might be time to get off the fence. Interest rates are at a 50 year low and rumored to be increasing the later part of 20111.

If you’re on the fence about buying a home–particularly a first home–two recent pieces of news should be of particular interest. The first is a study by the National Low Income Housing Coalition (NLIHC) revealing that rental units are becoming more expensive and less affordable. The logic behind this phenomenon is simple. Our population is growing, yet housing sales remain near all-time lows. More people are putting off home purchases, driving up competition and prices for rental units. Just as used car prices are skyrocketing in the sluggish recovery, economic pressures are forcing rental rates to skyrocket.

At the same time, the days of easy credit are coming to an end. Interest rates are set to rise, and minimum down payments are growing. Most recently, the GOP proposed a rise in the minimum down-payment from 3.5 percent to 5 percent, a potentially significant barrier to first-time buyers with stable incomes but small savings.

The upshot is that if you’re considering buying a first home at a bargain rate, your Window of opportunity may be closing. Renting may still make sense for you, but if it doesn’t, consider acting now before you get priced out of the market.