After the housing markets bubble burst many people shied away from home ownership and started renting affordable apartments. However, that trend is changing due to several factors. First, the cost of rent has been increasing over the last couple of years and secondly, now with record low interest rates and low home prices many people may find themselves taking a second look at buying rather than continuing to rent.
Why, because once they compare the cost of owning versus renting, buying a home very well may be the better choice.
A while back home ownership did not compare to renting, but with a 33 percent drop in home prices, record low mortgage rates hovering below 4 percent coupled with a 15 percent rise in rents since the housing markets collapse owning a home looks to be the better deal.
Nowadays, the average monthly mortgage payment of about $700 has dropped to about the cost of a median monthly rent check. Therefore, if mortgage rates remain low and rents continue to rise then, given this scenario, it will tip even further towards wanting to own rather than renting.
Granted the total cost of owning versus renting is not quite the same when you take into account closing costs, maintenance, insurance and property taxes but there's also tax savings from mortgage deductions and losses from home equity among other factors. However, renters need to take into consideration broker fees and future increases in rent.
When you take those factors into account and someone planned on staying put for seven years then they would likely come out ahead by almost $9,000 if they bought a median-priced home rather renting a median-priced apartment.
On average it's assumed that rents will rise about 3 percent a year and home prices will remain flat throughout 2012 and 2013 and will begin to rise in 2014 at about 3 percent a year.
Once the housing market collapsed a large part of the population dropped out as potential buyers, but given the fact that this does appear to be the time to buy we can only hope that this will be one aspect of the housing markets recovery process.