Renters have jumped into the housing market, and in a big way. Home prices have come down over 30% from their peaks, and combined with historically low mortgage rates, have resulted in the highest housing affordability index we’ve seen in 30 years!
In other words, the math is starting to work again. For example, San Diego has hundreds of 2 bedroom condos under $200,000, even in areas like Hillcrest, Mission Hills, North Park, Mission Valley, and Imperial Beach. These are condos with granite counters, stainless steel appliances and upgraded bathrooms.
A typical mortgage payment (including taxes) for this kind of property would range between $1,000-1,300 per month, depending on the down payment. This makes it very affordable for someone to buy and even rent a room out. As a home owner, you can also write off your interest and property tax payments from your income tax, which you can’t do as a renter. Lending is getting easier and government backed mortgages, like FHA loans, allow buyers to get into a home for a little as 3.5% down payment, that’s only $7,000 on a $200,000 home.
According to the latest industry report, 47% of all homes purchased this year were by homebuyers that hadn’t owned a home for at least the last 3 years. That number is up over 20% from a year ago.
The First-Time Homebuyer Tax Credit gives buyers up to an $8,000 tax refund. Even if the homebuyer owes no taxes, he can still receive an $8,000 refund check from Uncle Sam. In other words, it’s almost as good as money. On a $200,000 home purchase, that $8,000 tax credit translates to 4% of the purchase price!
It’s no wonder renters are leading the charge in our housing market’s recovery. They want to stop paying someone else’s mortgage as soon as they can pay themselves, and build equity.
Until next time, remember, at HomeReach.com, Sharing Is Caring.