If you’ve been hesitating to buy a home because you’re afraid you can’t afford it, 2020 might be the year you reconsider. Falling mortgage rates and rising rental prices indicate that buying could actually become more affordable than renting—in addition to the numerous other benefits of owning a home.
Here’s what rising rental prices could mean for you.
Rental Rates Rise While Homeownership Becomes Affordable
Real estate and rental professionals predict that 2020 could be a strong year for homeownership thanks to a number of factors. According to Freddie Mac, mortgage rates are expected to remain low, holding steady at an average of about 3.8%.
On the flip side, the national rent index increased by 1.4% year-over-year, according to the National Rent Report, and is expected to continue its climb.
Increasing rental rates add up fast
An increase of 1.4% might not sound like much—but the math is pretty powerful, especially considering that rental rates have been on a steady rise since 2012. In fact, in 2012, rental prices sat at an average of $1,300 per month. Today, eight years later, they’ve risen to $1,600 a month—an average of $300 more.
When you break down the math, those numbers become even more eye-opening. At $1,300 a month, you pay $15,600 a year for housing. At $1,600, that number climbs to $19,200. That’s a pretty huge difference!
Mortgage rates don’t change
One of the biggest financial advantages to homeownership, besides building equity, is the stability of monthly payments. Since most homeowners use a fixed-rate mortgage, your rates do not change. So if your monthly payment is $1,500 at the beginning of your payment, it will still be $1,500 eight, 10, 20, and even 30 years from now.
The bottom line: Buying is becoming affordable!
The bottom line for many is that skyrocketing rental prices are making it more and more difficult to find decent housing at an affordable price. Buying a home is quickly becoming a more appealing—and at times, more viable—option for many, thanks to low and predictable interest rates.
Thinking of Buying a Home in Raleigh?
Are you thinking of buying a home in the Triangle area? Linda Craft & Team would love to help! Contact us today to learn more about how we can use our 350+ years of combined experience to help you find the perfect home in just the right spot.