The Rent vs. Buy – a new site to help you decide …

The Rent vs. Buy dilemma may be one of the hottest questions I am asked as a local Realtor. It is not an easy one to decipher, as we must analyze the wants, needs, budget and goals list. And as rents soar to astronomical heights around here– this questions is getting to be a hot topic. So – when I came across this website SmartAsset – I was pretty stoked to read all the info, play with the widgets and come to some conclusions myself. Enjoy this article and make time to play on the site and see what best suits your needs.  Thanks for reading – Sabrina 

The Rent vs. Buy Decision

For a long time, the common wisdom was that buying a home was a far better financial choice than renting one. Throughout the second half of the 20th century, and into the first years of the new millennium, home prices across much of the country marched steadily upwards, and a house was considered the safest investment around. The logic was simple: if you were spending 30% of your income on housing anyway, might as well spend that hard-earned dough on something that would retain its value for you in the future. Renting, in contrast, was like lighting your money on fire and tossing it in the trash. The rent versus buy decision was a straightforward one.

That all changed in 2007, when the housing bubble that had been silently growing suddenly went pop. A house, it turned out, could lose value—and, as some real-life cases demonstrated, could do so in spectacular fashion. There were stories of totally abandoned neighborhoods outside of Las Vegas, and half-constructed mansions in Florida. Those with the misfortune to buy at the peak of the market in 2006 lost thousands or even millions of dollars overnight. Mortgages went underwater. A foreclosure crisis ensued. Meanwhile, the renters of the world were doing relatively well.

Today, there is no clear answer to the rent v buy question. In some cities, and for some individuals, buying a home may make more sense, while for others, renting a home may be the better choice. What makes sense for Nina in New Orleans and Steve in San Diego may not make sense for Dan in Denver and Christina in Chicago. So how does one decide the answer to this question of, Should I rent or buy?

Where a Rent vs. Buy Calculator Can Help

 Perhaps the most important factor to consider when making this buy or rent decision is how long you plan to stay in your home. If you’ll only be in town a year, renting will almost always be your obvious best choice. If you’re planning on packing up and leaving 12 months down the line, you probably don’t want to spend the time and money necessary to buy a house: think down payment, closing costs, loan charges, appraisal fees and so on. All told, the upfront costs of finding a house and taking out a mortgage can be in the tens of thousands of dollars (or higher!). As a renter, at worst you’ll have to pay a small application fee and make a refundable security deposit of a few months’ rent.

On the other hand, if you plan on staying put for 50 years, renting almost always makes no sense. In the long run, there are significant advantages to homeownership, one of the largest being the mortgage interest deduction, a tax benefit that allows you to deduct mortgage interest payments from your taxable income. For example, if you have a $2,000 monthly mortgage payment, and $1,500 of that goes toward interest, you can deduct that $1,500. So, your taxable income will be $1,500 lower. If we assume you pay a marginal tax rate of 30%, you would pay about $450 less in taxes each month by taking that deduction (30% x $1,500 = $450).

Rental payments, in contrast have no such advantages. Indeed, while a portion of each mortgage payment goes toward increasing your stake in your home by increasing your equity, rental payments go entirely to your landlord, and tend to grow over time. In the long run, the costs of renting can be much higher than buying.

So, if renting is better in the short-run and buying is better in the long run, when does the financial logic switch? When, in other words, do the long-run costs of renting begin to outweigh the upfront costs of buying? It could be three years, or seven or 15. The timing depends largely on where you live. That’s why our rent vs. buy analysis is location-based.

Should I buy or rent? Rent vs. Buy Examples

 As the saying goes: all real estate is local. That has never been truer than it is today. Some housing markets are booming and others are stagnant, and while in some cities rents have taken off, in others they remain as low as ever.

Take Atlanta, for example. Home prices there rose by about 4.4% over the past three years, while rents on two-bedroom apartments jumped 3.4% over the same time period. At those rates, it would likely make more sense for a person looking for a typical two bedroom home to buy if she planned on staying just two years.

In a city like San Francisco, where a typical house can sell for upwards of $500,000, the math can look a little different but the results are the same. Rents in San Francisco have jumped a whopping 8% in the past year, and home prices rose even more rapidly than that, by over 10% according to the Case-Schiller Index. If those rates hold, a San Franciscan staying in town for more than two years should buy now—if she can afford it.

New York City is a different story. Home prices in New York’s notoriously difficult housing market rose just 1.45% over the past three years, while rents over that period rose by around 5%. Even if you were able to find a two-bedroom for $350,000, it would only make financial sense to purchase it if you planned on staying put for a full 18 years.

The Big Apple is a big outlier when it comes to your rent or buy decision, however. Most cities in the U.S. are like Minneapolis, where home prices have risen 7% over the past three years, and rent for the average two bedroom apartment has gone from $960 to just over $1000, a 4.3% increase. In Minneapolis, a person looking for a typical house should buy if he plans on staying at least two years and has the money available for the upfront costs. The lesson here? When asking Should I rent or buy a house? be sure to take your location into account.

Reasons You Might Want to Rent or Buy a House

 Of course, while analyses like the above assume you are making your decision for purely economic reasons, there are other, non-financial factors that you may want to think about as well when wondering Should I buy or rent a house? Many renters, for example, enjoy the flexibility of being able to change pads at the end of their lease. For a homeowner, if you want to move, there’s quite a few hoops to jump through: find a real estate agent, get the house listed, meet with prospective buyers, accept bids, make a deal and, eventually, pay a bunch of fees to close the sale. Getting all of that done can take months, and can be very expensive.

On the other hand, buying a home gives you year-to-year continuity. Rents can change drastically over the course of just a few years, and there’s the ever-looming threat of eviction if a rent increase proves too much for you to afford. Most of the time as a homeowner, you won’t face any spikes in your payment (adjustable-rate mortgages are one exception), and you won’t have to worry about being tossed out on the street if your payment becomes too expensive.

Then there’s the question of maintenance: fixing leaky pipes, painting, cleaning gutters—these are all costs of owning a home, but many homeowners enjoy putting time and energy into their homes. By the same token, many renters complain of unresponsive landlords who refuse to deal with things like bad plumbing or a faulty fridge. These matters of personal preference are the intangibles that even the best rent or buy calculator (see above) can’t account for. Answering the question of Should I rent or buy a home? may require some soul-searching.

In the end, the rent vs. buy decision comes down to your preferences and plans. If you know exactly how long you want to stay in your home and where you want to live, and you have some money saved up, the decision could be as easy as calculating which option will cost you less. If your future is less clear, however, you may have more to consider.

How Long You Have to Live in America’s Biggest Cities for Buying to Make Sense

 Housing markets in major cities are often far more competitive than those in small towns or rural areas. That affects the rent vs. buy decision, as potential homebuyers in metros frequently face significantly higher prices, fees and closing costs. Those high upfront costs can mean that it only makes sense to buy for homeowners who are willing to stay put for a longer timeframe.

With that in mind, SmartAsset took a closer look at the data on renting and buying in the largest U.S. markets. We determined the breakeven point, the time it would take for a homeowner to recuperate those upfront costs of buying a home. (For more on our methodology, check here.)

Developments like the boom in tech jobs and increased migration to sunny West Coast cities have shifted housing economics towards renting in some parts of the country, while in other areas, like the South and Texas, buying is still usually the better bet.

 New York City

New York: 18.3 years (to recuperate costs of buying)

The Big Apple’s housing market is notoriously competitive, and indeed, SmartAsset’s research shows it is the worst urban market for homebuyers in the country. Good deals are nearly impossible to come by and when an attractive option appears on the market, it is often snapped up in days if not hours. That competition bids up prices, which means homes are comparatively more expensive than rentals. The typical New Yorker would need to stay in her home more than 18 years to justify buying instead of renting.

The Tech Hubs

San Jose: 16.73 years

Seattle: 14.9 years

San Francisco: 14.6 years

The boom in high technology over the past few years has generally been concentrated in a relatively small number of cities. It has been especially pronounced in the Bay Area and in Seattle. The growth in high-paying tech jobs in these cities has had profound consequences on their homebuying markets.

In these three cities buying a home only makes financial sense for those who can stay put for at least 14 years (on average). Take note, however, of rising rents. If rents in these cities continue to increase over the next few years, buying may become a more sensible medium-term option for those who have the cash to cover closing costs and a down-payment.

The Sunny West Coast

Orange County: 10.8 Years

Los Angeles: 8.8 years

San Diego: 8.6 years

Honolulu: 8.6 years

In these four western cities, the weather is great, populations are growing quickly, and renting usually beats buying. Average home prices in these cities aren’t quite as high as in the tech hubs or New York, but they are still outside the range most residents would consider affordable. On average, homebuyers in these cities recuperate the costs of buying (instead of renting) after 8 to 11 years.

 Portland

Portland: 6.9 years

As usual, this Oregon city defies categorization. It hasn’t experienced the boom in tech jobs of its neighbors to the north (Seattle) and south (San Francisco), and the weather in Portland isn’t the draw that is in other Western cities. Yet, the average home in Multnomah County costs over $315,000 (50% more than the U.S. average) and population growth has been steady. Those factors place Portland in a middle ground between buying and renting: for the average Portlander, buying makes sense if she plans on staying put for seven years or more.

 Old Money

Washington, D.C.: 6.5 years

Boston: 6.3 years

D.C. and Boston have historically been among the most expensive housing markets in the country. In these cities, high up-front costs tilt the economic logic away from homebuying for residents who may plan to move around in the near future (recent graduates, for example). But residents who are settling down for the long-term (like more than 6.5 years) could be better off buying.

 The Wild West

Riverside: 5.8 years

Phoenix: 5.7 years

Denver: 5.4 years

These three western cities are experiencing strong population growth, which has put some upward pressure on home prices. In these cities, residents who are comfortable staying in one place for the medium- or long-term should at least consider buying. On average, they will recuperate the high up-front costs of purchasing (instead of renting) in five to six years.

 The Midwest

Pittsburgh: 4.3 years

Chicago: 4.2 years

Minneapolis: 4.2 years

Especially compared to the west and the northeast, buying and renting in the Midwest are both relatively affordable—but because homeownership also increases a person’s net worth over time, buying often makes more sense in the medium- and long-term. The average homebuyer in one of these Midwestern cities should recuperate the upfront costs of closing on a home in just over four years. 

Texas and the South

Houston: 4.2 years

Tampa: 4.1 years

Charlotte: 4.1 years

Atlanta: 4.1 years

Miami: 4 years

Austin: 3.7 years

St. Louis: 3.6 years

Dallas: 3.2 years

Traditionally the most affordable parts of the country (for homebuyers), Texas and the south lived up to their reputation in our analysis. In every major southern or Texan city we examined, the average resident would recuperate the up-front costs of homebuying within just four and a half years of closing. After that, the savings would begin to accumulate.

 Philadelphia and Detroit

Philadelphia: 2.9 years

Detroit: 2.6 years

These two cities buck all the trends. Both have seen their populations fall in absolute terms in the past 50 years (Philly’s by 25% and Detroit’s by 50%). The result is a housing supply far larger than demand, and, in turn, bargain basement prices. On average, a resident of either of these cities should only stay in a rental if she might be moving in the next 3 years.

 

I read this article at: https://smartasset.com/mortgage/rent-vs-buy#YeTvhq5Utt

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522

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Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

 

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Renters Are Not Saving To Buy a House

When I read the above title – my jaw dropped.  How can renters not be saving for a home?  The statement alone broke my heart.  Owning a home – to me – means long term security.  More than a place to live!  A long term investment!  Read on and share your thoughts!

-Sabrina

Renters aren’t saving to buy a house

Looking across the vast spectrum of housing surveys today, most will claim that the majority of renters want to buy a home eventually. That may be, but they’re not saving to do that.

In fact, saving for a down payment to buy a house ranks fourth on their list of priorities, according to a survey conducted in October by Harris Poll for Freddie Mac, which helps fund loans to homeowners and apartment developers.

When asked about their savings priorities, more renters said they consider saving for emergencies (59 percent), retirement (51 percent) and children’s education (50 percent) an “essential/high priority.” Only 39 percent said saving for a down payment. This is particularly surprising given fast-rising rents.

Rising rents, up over 5 percent annually nationwide, are affecting how renters spend their money more today compared with just a few months ago. More renters say they are making changes to spending or plans due to those higher rents. Just over half of those surveyed who have seen a rent increase in the past year say they are living payday to payday.

“We know rents are rising faster than incomes, and now we have data to show that many renters don’t have enough to pay all their debts each month, which is forcing them to make tradeoffs, such as cutting spending on other items,” said David Brickman, executive vice president of Freddie Mac Multifamily.

The share of renters who say they now have to put off plans to purchase a home rose to 55 percent in October from 44 percent in the last Freddie Mac renter survey in June. This occurred even as more said they would like to buy a home and have started looking.

Add it up and the lack of affordability is the answer. Renters may be looking, but they’re not buying because they are faced with rising home prices and rising mortgage interest rates.

When asked the main reason they expect to still be renting three years from now, the top three answers had to do with affordability. The fourth was not good enough credit.

There is a growing divide, however, between those who rent a single-family home and those who rent in a multifamily apartment building. Seven in 10 multifamily renters said they expect to continue renting, up from 64 percent in the previous quarter. Renters of single-family homes say they are more likely to buy a home.

“Growth in the renter segment will most likely occur through multifamily properties as more than half of those currently renting single-family properties are planning to become homeowners in the near future,” said Brickman. “The data shows single-family renters are increasingly more dissatisfied than multifamily renters.”

That does not bode well for the growing number of investors in single-family rental homes. Even as large-scale institutional investors slow their purchases of homes to rent, smaller-scale and individual investors are picking up the slack. The number of single-family rental homes rose 35 percent since 2006, to 15.1 million from 11.2 million, according to John Burns Real Estate Consulting. Roughly 3.9 million owner-occupied homes became rentals in that time.

Either apartment managers are doing a better job of serving their tenants than single-family rental managers, or more renters simply prefer the apartment model, which usually offers additional amenities and better locations.

“Right now we’re in the golden age of the fundamentals of the multifamily business,” apartment developer Richard LeFrak said on CNBC’s Squawk Box. “You have a drive toward urbanization where more and more people want to live in cities.”

The survey of 2,020 adults was conducted online within the United States between Oct. 8-12. Of those surveyed, 703 were renters.

I read this article at: http://www.cnbc.com/2015/11/18/renters-arent-saving-to-buy-a-house.html

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522

Want Real Estate Info on the Go? Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

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Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

 

Bay Area rental crisis squeezing out middle class

Before you read this article – please note I will share my insight on how to work around this rental crisis in next weeks blog installment.   Next weeks blog – http://wp.me/p1GGbd-j9

Bay Area rental crisis squeezing out middle class

Diane Nesom rents a tiny cottage — just 600 square foot and one-bedroom — at the end of a cul-de-sac in Fremont for $1,400 a month. And while that eats up about 50 percent of her take-home pay, the 35-year-old accountant regards it as “a steal” and can’t imagine moving up to a larger rental in the current runaway market.

“I earn too much income to qualify for any kind of affordable housing,” she said, “but not enough income to actually afford anything else, so I’m stuck in this middle craziness. It’s not a fun place to be.”

Maxed out on her budget — “if anything goes wrong, I’m ruined” — Nesom is among the legions of professionals who struggle to navigate the Bay Area’s escalating rental market, where it’s no longer unusual for high-end apartments to fetch $4,000 or $5,000 per month and sometimes more, especially in Silicon Valley hot-pockets like Palo Alto and Mountain View.

Though thousands of new apartments were completed around the region in the last year, the inventory can’t keep up with tech-fueled job growth. With vacancy rates at about half the national average, the demand for housing has sent rents through the roof, creating a sense of desperation for many who are being priced out. According to the most recent data, an average two-bedroom apartment now costs $2,884 in San Mateo County, $2,552 in Santa Clara County and $2,172 in Alameda County. Contra Costa County is a relative bargain at $1,835, though bets are on for how long that will last.

For most of the region, rental prices are up about 50 percent since 2010, and up about 10 percent in the last year, according to the Marcus and Millichap real estate brokerage firm, which crunched the data for this story with help from the MPF Research group.

“Rents are at a historic high,” said Caryll-Lynn Taylor, executive director of Neighbors Helping Neighbors, a Peninsula-based nonprofit that educates clients about the increasingly complex rental market and helps them navigate it. Landlords typically ask tenants to show annual income that’s triple the cost of rent. As a result, many middle-income workers are imperiled. A $2,500 two-bedroom apartment requires $7,500 in monthly income, or $90,000 per year.

“So you rule out our school teachers, most of our firefighters, many of our tech workers,” Taylor said. “And where do they go to rent and live?”

Many displaced tenants spend half a year or more searching for new apartments, she said. Of the approximately 4,900 households with incomes between $50,000 and $160,000 that the agency serves, about 370 are living in their vehicles, mostly in Mountain View and Palo Alto.

Elected officials and citizens groups from San Jose to Richmond are putting new energy behind rent control measures and related efforts to stabilize rents and prohibit unjustified evictions. Richmond has been considering strict rent control and eviction policies, while Berkeley, San Francisco, Oakland, San Jose and a handful of other local municipalities already have rent control ordinances. But many observers believe a long-term solution to the rent crisis requires a pronounced regional effort to increase housing supply, bringing it into better balance with the rate of job growth.

The pent-up demand for housing is taking a toll on Mark and Caitlin Fisch, who live with their three young children in a 2-bedroom apartment in Mountain View that rents for $2,575. A well-paid private schoolteacher, Mark has so far been able to make his payments, while Caitlin home-schools the kids. But with their lease expiring in September, they learned this month that the rent is going up — way up — to $3,600. Their options: sign a new one-year lease at the new rate, go month-to-month at $6,566, or leave. The family expects to do the latter.

“We always knew that there would probably be a raise in rent,” Caitlin Fisch said, “because that seems to be the trend. But we were thinking something on the order of 10 percent.” She suspects the hike is “spurred by the inflated salaries at the tech giants” in town, most notably Google.

Failing to negotiate “the crazy maze” of rentals has led Andrea and Frazier Hubbard to unexpected living quarters: their 26-foot trailer, in which they have camped for the last eight months on the grounds of a church in Palo Alto. Andrea is a Stanford office administrator. Frazier is a business analyst with a firm on the Peninsula. Their combined income is just shy of $100,000, Andrea said, “but you can’t really save when you’re paying thousands of dollars a month for a little apartment.”

By living rent-free in their trailer, they hope to build their savings and eventually buy a house in the somewhat more affordable East Bay.

The rental market is “super-tight,” said John Chang, of Marcus and Millichap. He drew this picture: With so many jobs being created in the last year in Silicon Valley and San Francisco, the Oakland metropolitan area has emerged as “a more affordable alternative” for renters. It’s an “overflow market,” Chang said, “where people looking for better affordability are going. The housing demands in the East Bay are not so much driven by the growth of the employment there, as by the growth in the entire region.”

He cited these numbers: In the last year, San Jose metro led the region in job growth with 59,300 new positions, a 5.9 percent jump that’s nearly triple the national increase of 2.1 percent. San Francisco registered 47,500 new jobs, Oakland metro another 20,900. There is simply not enough housing stock being added to absorb that many people, so they are either doubling up or moving to neighboring areas. And even those “overflow” cities like Oakland are starting to feel overwhelmed.

Joe McCarthy, senior project manager for San Francisco-based Bridge Housing, didn’t know what to expect when the affordable housing developer opened the application process in June for 68 units at the new AveVista Apartments on Lake Merritt in Oakland. For two weeks, lines circled the block as more than 3,700 people applied to live in the apartments, half of which will rent for between $785 and $1,399 per month. The other half, governed by Section 8 subsidies, will rent for about 30 percent of a resident’s income.

“It was the busiest lease-up we’ve ever experienced,” said McCarthy, who attributes the unusual level of interest to “the job generator that has started up in Alameda County and Oakland. We’re seeing a lot more folks looking for housing.”

Nesom, the Fremont accountant, can attest to that.

She recently went apartment hunting with her best friend, Molly Darling, who must leave her $1,300 rental in Alameda this fall. The house Darling lives in has been sold and the new landlord is likely raising the rent.

The duo checked out an open house “for a tiny — and I mean tiny — one bedroom cottage in Alameda,” Nesom recounted. “I mean, it could barely fit a twin bed. And the rent was like $1,500 a month, and there must have been at least 12 people in line when we got there.”

A $1,300 rental is just about the limit for Darling, who works as an office manager: “I can probably push it a little more than that,” she said, “but it’d eat into my groceries. My wages haven’t gone up, but the rents have exploded to the point that I can’t afford to live by myself. I’m boxed in.”

Contact Richard Scheinin, read his stories at www.mercurynews.com/richard-scheinin and follow him at www.twitter.com/RealEstateRag.

I read this article at: http://www.mercurynews.com/business/ci_28585609/bay-area-rental-crisis-squeezing-out-middle-class

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at: Info@TheCatonTeam.com

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Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

 

New Rental Units Too Pricey for Most Renters

New Rental Units Too Pricey for Most Renters

Much of the recent multifamily construction has focused on the luxury segment, which is pricing renters out of the market, according to Harvard University Joint Center’s 2015 State of the Nation’s Housing Report.

The rising costs in multifamily development pushed the median asking rent for newly constructed rental units up to about $1,290 per month as of 2013. That marks an increase of $180 compared to 2012, according to U.S. Census Bureau data.

Meanwhile, the typical renters’ incomes rose by just $60 a month, going from $32,000 in 2012 to $32,700 in 2013, according to the American Community Survey.

In order to afford a standard new multifamily unit, a household would need to earn at least $51,440, according to JCHS. Less than a third of renters, however, earn this much.

In some areas, rental costs are even higher. JCHS’ report notes that 84 percent of new multifamily units in the Northeast and 67 percent of those in the West went for a monthly rate of $1,350 or higher in 2013. In fact, many units built in 2012 to 2013 rented for at least $2,000 per month – which would require an annual salary of at least $80,000.

In the South and Midwest, new units rented in the $1,350 range were only about a third of growth, which indicates a more even regional supply of new units by price.

“While new multifamily construction is easing some of the demand for new units, it is currently not sufficient to ease the broader affordability problems facing renters,” notes Elizabeth La Jeunesse, a research analyst, at the JCHS’ Housing Perspectives blog. “Closing the gap between what it costs to produce this housing, and what economically disadvantaged households can afford to pay, requires the persistent efforts of both the public and private sectors.”

Source: “New Multifamily Construction Is Out of Reach for Most Renters,” Harvard University Joint Center for Housing Studies’ Housing Perspectives Blog (July 30, 2015) DAILY REAL ESTATE NEWS

I read this article at: http://realtormag.realtor.org/daily-news/2015/08/04/new-rental-units-too-pricey-for-most-renters?om_rid=AACmlZ&om_mid=_BVwQu3B9EOtOGt&om_ntype=RMODaily

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

 

County rents jump — again

County rents jump — again

February 02, 2015, 05:00 AM By Austin Walsh Daily Journal

As rents continue to skyrocket throughout the region, housing experts say San Mateo County residents should not expect to see relief in the near future.

In the past year, average monthly rents in the fourth quarter increased $227, jumping to $2,572, according to reports from according to RealAnswers, a group that compiles apartment data.

During the fourth quarter in San Mateo, studio apartments increased by an average of $193 from last year, to $1,762 per month, marking a 12.3 percent increase. One-bedroom apartments with one bathroom increased by 10.3 percent on average to $2,332 per month, up $218 from 2013. And two-bedroom, one-bathroom apartments increased $181 per month, to $2,593, a 7.5 percent increase from the previous year, according to the report.

But some renters have seen increases as substantial as $600 in a year, said Josh Hugg, program manager at the Housing Leadership Council of San Mateo County.

Hugg and other advocates for renters promote policies that protects residents from exorbitant rates or increases.

“We need more affordable housing,” Hugg said.

Well-paying technology jobs are frequently cited for driving up costs across the region, but Hugg noted that for every job created in the tech sector, there are multiple support workers who are finding it increasingly difficult to live locally.

“When we bring in all these great jobs, they are creating jobs of more modest means,” Hugg said. “We are not making a place for them, even though they are the fastest growing part of the workforce.”

Some residents are being priced out of their homes, and are forced to move back in with their families to afford the cost of living, said Sally Navarro, a rental, sales and property management Realtor for AVR Realty in Burlingame.

“Everyone is piling in until they find something. Folks are just waiting it out to see what’s going to happen,” she said.

But the outlook is not optimistic for those hoping to see prices drop, she said.

Navarro, who has worked in the local rental industry for nearly three decades, said she has never seen a tougher rental market than what is currently available.

“I don’t see that it’s going to get a lot better,” Navarro said.

The best that renters might hope for is that rates level out from their constant incline. Navarro said that she has not seen rents decrease since the dot-com bubble burst around the turn of the century.

She said that the feeling of dissatisfaction with expensive rents is prevalent throughout the county.

“People are extremely frustrated,” she said.

But it’s not bad for everyone involved in the housing industry, said Navarro.

“I think landlords are very lucky right now,” she said. “They have been reaping the benefits for quite a while.”

But she expressed compassion for those who are trying to find a new place to live in the current market.

“I feel bad for tenants. We don’t know how it’s going to go, or when it’s going to change. In the meantime, we have people looking for places and there is nothing out there. It’s really frustrating,” she said.

Those interested in landing a new place should bring all the preliminary paperwork with them to the appointment, and be willing to pay more than the market rate, Navarro said.

Though the region has reaped the benefits of being a globally acclaimed hub of innovation and is seen as a gold mine for people across the globe, Hugg said the success has come at a substantial cost to those who have lived in the region for years.

“We are a victim of our own success,” he said.

 

I read this article at: http://www.smdailyjournal.com/articles/lnews/2015-02-02/county-rents-jump-again/1776425137606.html?interaction=normal

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

 

Think You Cannot Afford to Buy in the Bay Area – Think Again…

When the SF Chronicle published that in order to buy a home in the Silicon Valley a buyer needs to earn a minimum of $150,000 a year, the groan was heard across the Bay Area as 1st & 2nd time homebuyers cringed when they looked at their w-2’s.  Trust me – I know the feeling.  Born and raised in beautiful San Carlos I knew it was only a matter of time before our property values would tip $1,000,000.  Of course I was just 16 when I made this prediction and sadly no one listens to the young.

Now that I am a professional Realtor, going on 11 years in this competitive industry, people start to listen.  Finally!

Yes, in order to buy a 3 bedroom 2 bath home on a 5000 sqft lot in just about any town on the peninsula it is going to take a lot of pretty pennies.  But before the 1st and 2nd time homebuyers give up – lend me your ear for just a second.

As a 2nd time homebuyer myself.  (Just sold my 1st place last year), I’ve been saving my money like crazy – and it doesn’t seem to add up to much when homes in the area are selling for over their listed price with multiple offers.  Trust me, I feel the sadness so many buyers are feeling right now.  However there is hope!  We just need to change our goals.

So the Silicon Valley is getting very very pricey.  When clients think about buying their first place, they often think of buying the home they plan on living in for the next 10 years.  Which is a wise plan, but if you are not raking in the $150,000 income – don’t think you cannot buy.  Just think outside the box.

I recently sat down with my broker to chat about my plans to buy another property and the sentiment I’ve heard from prospective home buyers around the peninsula.  His advice – buy investment properties.  Maybe not in the immediate area, but down South or the East Bay where there are MANY well-priced opportunities to buy.  So you might not be planning to live in Antioch – but there are many people who are and buying an investment property gets your foot in the Real Estate door.  Yes, you will become a landlord with home responsibilities.  But then again, if you wanted to buy a home in the first place you are pretty much signing up for a lifetime of being your own landlord and caring for any property you purchase.  So the flip side here is – you are the landlord and you reap the benefit of INCOME on your investment property.

That income can be used to buy another property.  Once you become an investor, you can 10-31 exchange one investment for another, convert it to a primary residence (consult with your tax advisor for restrictions) or simply continue to pay the mortgage and keep collecting your income.

Don’t have enough money to invest by yourself?  Find other like-minded individuals with capital and form an investment group.  There are some restrictions so I do advise you consult a Realtor (I am always available)  and a Real Estate Attorney to draft an investment agreement.

The benefits of buying your first investment property are similar to buying your own home.  There are tax incentives and there are headaches.  But in the game of Real Estate – the only way you can advance is to become a player in the game.

What are your thoughts on investing in Real Estate or forming an Investment Group – I’d love to hear YOUR opinions!

I wrote this article – thanks for reading – Sabrina

 

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Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office:  650-365-9200

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Thanks for reading – Sabrina

 

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ Office BRE# 01499008

6 Wills, Won’ts and Worries of 2013 Home Buyers…. great article – had to share…

When I read this – I just had to share….

 

6 Wills, Won’ts and Worries of 2013 Home Buyers

 

Trulia Article By Tara-Nicholle Nelson

If you’ve ever taken up running, you might know what it’s like to strap on your new shoes, head over to the track and take those first few strides, then feel a pain in your chest, heaviness in your feet and possibly, actually see stars. Maybe your last steps off the track were accompanied by the thought process: “Either I’m crazy, or runners are.”

Until you have talked to a legitimate, dyed in the wool runner and told them your story, explaining why you detest running with every iota of your being you won’t know the runner’s secret: everyone feels that way at first. It’s the normal physiological adjustment to the increased load you’re putting on your cardiovascular and musculoskeletal systems, this pain you felt when you took those first few steps.  It goes away in just a moment, if and only if you keep on running.

Sometimes, knowing that others react to a tough situation by feeling the same emotions, thinking the same thoughts, or doing the same things you do flat out helps you feel less crazy, panicked and out of control of your situation. It’s the concept behind support groups but, last I checked, there really isn’t such a thing as group therapy for home buyers. (Well, some would say that’s what Trulia Voices is for, but I digress.)

Today’s rapidly rising prices and generally volatile market does make things tough for buyers, so we thought we’d systematically explore – and then share – what’s going on inside the minds of the buyers on today’s market.  Hopefully, sellers will find some insights for marketing their properties, too.

Fresh off the presses, here are some of the insights and takeaways from our latest American Dream Survey, pinpointing the things today’s buyers worry about, will and won’t do in their quest to get their own corner of the American Dream: a home.

Worry:  Mortgage rates and prices will rise before I buy.  Trulia’s Economist Jed Kolko reports that “the top worry among all survey respondents who might buy a home someday is that mortgage rates will rise further before they buy (41%), followed by rising prices (37%).”  The worry is valid, given the fact that the market was depressed for so long and has a long recovery road ahead of it.  It’s compounded by the fact that buying a home has gone from something that used to take a month or two and now routinely takes 6 months, 9 months, a year or even longer!

Here’s the deal: you can’t stop prices from rising. And fixating on this particular fear poses the potential pitfall of  rushing to buy or making compromises that will turn out badly in the end.  Don’t dilly dally, if you’re ready and in the market, and don’t mess around making lowball offers with no chance of success.  But otherwise, don’t let this fear drive your buying and timing decisions.

Will:  Be aggressive. B. E. Aggressive. Economist Kolko explained, “among survey respondents who plan to buy a home someday, 2 in 3 (66%)  would use aggressive tactics such as bidding above asking, writing personal letters to the seller, or removing contingencies, to name a few.”  What buyers do and don’t do in the name of aggressively pursuing their dream homes (and, consequently, what sellers expect) is slightly different in every town.

Knowing that other buyers are facing down the same challenges you are and coming up with similar, aggressive solutions can help you feel a little less crazy about your thought processes and emotions and the desperate measures that come to mind when you hear how many others think “your” home is their dream home. And that puts you back in control of what can sometimes feel like an out-of-control situation. Reality check: you are 100% in the driver’s seat when it comes to how aggressive you want to be in your pursuit of any given home, and which specific tactics you leverage in the course of that pursuit.

Worry:  I won’t find a home I like.  Forty-three percent of people who plan to buy a home in the next 12 months expressed the concern that they might not be able to even find a property they like. Perhaps these people were just seriously persnickety, but I suspect there’s a bigger issue at play here.  All of us can find a home we like, but whether there’s anything we like enough to buy in our price range is a completely separate issue.

This worry, then, seems to be closely related to the fear of rising prices – buyers are rightfully fearful that home value increases will put their personal dream homes out of their price range. This is why it’s super important to:

  • be aggressive about seeing suitable properties as soon as they come onto the market
  • work with an agent whose offer pricing advice you trust
  • adjust your house hunt downward in price range if the market dynamics include lots of over-asking sales prices, and
  • not to let months and months go by while you make lowball offers or otherwise be slow to  come to the reality of what homes are actually selling for in your area.

The sooner you put yourself seriously in the game and make reality-based offers, the more likely you’ll be able to score a home you like in your price range.

Worry:  I will have to compete with other buyers for the home I like. Twenty-seven percent of those who plan to buy at some point in the future and 32% of those who plan to buy in the next year said they feared the prospect of facing a bidding war. This worry is well-grounded. In California, the average property receives four offers – but stories of dozens of offers abound. And it’s not just a West Coast phenomenon: buyers from coast to coast trade tales of getting outbid and having to throw in their firstborn child, lastborn puppy and most precious earthly possessions just to get into contract.

Truth is, market dynamics vary from town to town, and even neighborhood to neighborhood, but if you’re buying on today’s market or planning to buy anytime soon, bidding wars, multiple offers and over-asking sales prices are a reality you will probably have to factor into your house hunt.

Won’t:  Bid way more than asking.  Only 9 percent of wanna-be buyers said they would bid between 6 and 10 percent over the asking price for a property. This finding surfaces the uber-importance of checking in with an experienced local agent to get a briefing on precisely how much over asking homes are selling for in your area.  This empowers you to tweak your online house hunting price range low enough that you can make an over-asking offer and be successful without breaking the bank.  And once you’ve gotten a reality-based estimate of the over-asking norm, it will loom less ominously in your mind’s eye as a potential American Dream-killer.

Worry:  I won’t qualify for a mortgage.  Thirty percent of all people who identified themselves as planning to buy a home in the future said they were worried they might not be able to qualify for a home loan. (Interestingly, only 25 percent of buyers in hot markets like Oakland and Las Vegas expressed this concern – rapidly rising prices and knowing lots of other buyers are closing transactions in your town seems to ease this fear.)

Of all the worries on the list, this is the one over which a smart buyer has the most power. So exercise it! Work with a mortgage broker who was referred by friends, family members or an agent you trust.  And ideally, work with them months – even a year or more – before you plan to buy.  They can help you put an action plan in place around boosting your savings and credit score, and minimize your debt and credit dings, that you can work to minimize mortgage qualifying dramas when the time is right. They can also help give you a stronger sense of what you can afford vis-a-vis your income, to help you anticipate any challenges related to what sort of home your dollar will buy in your market.

ALL: What worries do you have about today’s market? Which steps are you willing to take in your quest to achieve the American Dream?

I read this article at:  http://www.trulia.com/blog/taranelson/2013/07/6_wills_won_ts_and_worries_of_2013_home_buyers?ecampaign=cnews20+and1308A&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2013%2F07%2F6_wills_won_ts_and_worries_of_2013_home_buyers

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Thanks for reading – Sabrina