Whose Mortgage Do You Want to Pay? Yours or Your Landlords?

There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

With home prices rising, many renters are concerned about their house-buying power. Mike Fratantoni, Chief Economist at MBA, explained:

“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.” 

As an owner, your mortgage payment is a form of ‘forced savings,’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

As mentioned before, interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.46% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

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Benefits of Home Ownership

Baton Rouge metro closes year with fewer home sales, higher prices

High demand and limited housing inventory sent Baton Rouge metro home prices higher in 2018, though not at the same clip as in previous years, according to the year’s final monthly sales report from the Greater Baton Rouge Association of Realtors.

A big reason for the semi-chilling effect is rising mortgage rates, prompting some would-be buyers to remain on the sidelines.

For the year, 10,603 houses where sold in the eight-parish region, according to GBRAR statistics, a 5% decline from the 11,198 sold in 2017.

Looking at December, sales slipped 12.4%, to 687 sales, across the market compared to the same month in 2017. It was a month marked by higher inventory (4,050, up 12.6%), rising average sales prices ($231,987, up 4.5%) and houses remaining on the market for more days (increasing by 11 days to 78, or 16.4%).

In a sign the market is easing a bit more in favor of buyers, the month’s supply inventory eased higher by 15% from historic lows, finishing the year at 4.6 months. Typically a figure below six months indicates a sellers market.

While unemployment rates remained low last year and many households saw improved incomes, the average wage increase didn’t keep pace with rising housing prices, according to report. 

“This created an affordability crux in the second half of 2018,” reads the report.  “Housing affordability will remain an important storyline in 2019.” 

As detailed in Business Report’s latest cover package, the market is expected to shift in the direction of buyers—or at least balance out—this year as the supply of homes is gradually rises and properties sit on the market for longer periods.

Read the full report. And check out Business Report’s latest cover package, which predicts the people, politics, business news and issues that will make headlines in Baton Rouge this year, including shifts in the residential real estate market. 

 

Selling Your Home? Make sure your Price is Right!!

If you’ve ever watched “The Price is Right,” you know that the only way to win is to be the one to correctly guess the price of the item you want without going over! That means your guess must be just slightly under the retail price.

In today’s shifting real estate market, where more inventory is coming to market and home values are projected to appreciate at lower rates, homeowners will not be able to price their homes as aggressively as they were able to just last year.

They will have to employ the same strategy: be the closest without going over!

As we have explained before, pricing your home at or slightly below market value actually increases the number of buyers who will see your home in their search!

Over the last six months, more inventory has come to market while the months’ supply of inventory available has dropped. This means that the demand for homes to buy is still very strong throughout the country!

Homeowners who make the mistake of overpricing their homes will eventually have to drop the price. This leaves buyers wondering if the price drop was caused by something wrong with the homes when in reality nothing was wrong, the price was just too high!

Bottom Line

If you are thinking about listing your home for sale this year, make sure you have a real estate professional on your side to help you properly price your home from the start!

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Buying a Home is 36% Less Expensive than Renting Nationwide

The updated numbers actually show that the range is an average of 5% less expensive in Orange County (CA) all the way up to 46% in Houston (TX), and 36% Nationwide! 

Other interesting findings in the report include:

• Interest rates have remained low and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.

• Some markets may tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.

• Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989. 

Bottom Line

Buying a home makes sense socially and financially. f you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with Christie Farris, who can help you find your dream home.