Home Buying Advantages in Today’s Real Estate Market

Home prices undoubtedly soared over the past couple years, but as any renter can tell you, rents have absolutely exploded. According to an article in the New York Post, rent increases in 2021 were more than double what they had been in any previous year.

A recent decrease in home prices has been old news for a few months now, and to some extent the prices of rent as well. Neither of these developments is surprising- the cost of purchasing a home throughout the U.S. had reached a saturation point never before seen in our market, plus home buyers were understandably becoming wary of what they saw as unreasonable home sellers who were open to no compromise including necessary repairs. In addition, the FED has raised interest rates in an effort to curb inflation, stabilize the economy and steer our Real Estate market back toward something resembling ‘normal’.

Home buyers hold far more of the cards in today’s adjusting market. They are once again in a position to request, and in some cases demand, that sellers consider negotiations that just a year ago would have been automatically ignored. The reestablishment of contract concessions as commonplace is huge for home buyers.

So what sort of allowances are home sellers making? Necessary repairs are back with a vengeance and even requests for purely cosmetic updates like paint and carpeting are not unheard of. Seller contribution toward home buyer’s closing costs are becoming more common However mortgage buydowns may be the one concession every home buyer should consider including in their contract negotiations.

So what is a mortgage buydown? Maybe the most useful way to neutralize the impact of rising mortgage interest rates. A mortgage rate buydown works like this. The home buyer pays a one-time upfront fee (often negotiated via contract to be paid by the seller), usually a percentage of the mortgage amount, to literally buy down the interest rate. This most commonly continues for the life of the loan. Note: incremental buydowns are also available though not nearly as popular.

Debunking the Top 4 Renting-Is-Better-Than-Owning Myths

If you’ve never bought a home before, you may have been lead to believe that renting is a smarter choice than buying. However, for the vast majority of people, that simply is not accurate. Below are some of the top myths, and myth busters regarding the advantages of renting over owning.

Myth No. 1: You can’t afford the down payment. Many would-be homebuyers opt for renting believing that they won’t be able to afford to save the 20 percent down payment. In reality, you usually don’t need to put 20 percent down. In fact, you can often put 5, 10 or even as low 3.5 percent down.

Myth No. 2: Renting is cheaper. Even if your monthly mortgage payment ends up being a little higher than what you might have paid in rent, that money is going toward your own long-term financial investment. Owning your home amasses equity. When you pay rent, you’re making your landlord richer, not yourself.

Myth No. 3: You won’t recoup your money. Unlike stocks, real estate has long been considered the safest long-term investment you can make. Yes, the market will experience cycles, but if you’re in it for the long-run, it is reasonable to expect that you will earn back your investment (and then some).

Myth No. 4: Renting is less of a hassle. Certainly, you have less vested in a rental, but the blood, sweat and tears you invest turning a house into your home is not only richly rewarding but satisfying in a whole other way. Not only are you creating and living in the environment that you want without the restrictions of a landlord, you are also building upon your original investment with each and every repair, improvement or update.