It’s been about a decade since our housing crisis and there’s been a couple different outcomes that have emerged over the last 10 years. There are those that can now afford to buy a home and those that may be stuck in the rental market. The rental market may or may not be the fault of the consumer. Foreclosures, short sales and job loss can all make a consumer stay in the rental market, spinning their wheels for quite some time. The rental market is a hard one to get into and once people are in it, changing to another rental option might be almost impossible. Not only do they have to come up with first months rent, last month’s rent and deposit but they are probably spending more each month on their rental payment than they would on a mortgage payment.
Read more: To Buy or To Rent – That’s the Real Question
On the other side of the coin are people that have the potential to buy. They may have saved up a little bit of money, rebuilt or maintained a good credit score and have the option to purchase a home. Most Americans still want to be homeowners if they can afford it. According to the Harvard University Joint Center for Housing Studies have stated that many Americans are still striving toward that “American dream”. However, rising student loan debts and the demand for rental properties are two things that are keeping Americans from actually saving and buying their own homes. In 2014 alone over 11 million people dedicated half of their income simply to their rental payments. In order to purchase, most lenders only allow up to 30% or in some cases 35% of your income towards housing payment.
Also, many Americans are waiting longer to get married and start a family and therefore waiting longer to purchase a home as well. 75% of Americans that earn $30,000-$45,000 spend at least 30% of their income on rent whereas those making $45,000-$75,000 are spending 30% of their income on a rental payment. The interesting thing to note is that many mortgage payments could actually be lower than rental payments, especially in Orange county and Southern California.
For instance, the median home price for Irvine California is about $730,000. With a 20% down payment that rounds out to about $3200 a month in mortgage including principal, property taxes and homeowners insurance. The current median rent price each month is about $3300. However, with all the student loans and strains on potential home buyers, coming up with that 20% down payment is really the biggest issue. Should they pay off student loans or other debts or safer home? It is the ultimate question that many Americans are facing each day however, if it can be done, there are many USDA loans, FHA and jumbo loans that may offer lower downpayments allowing for more Americans to get into a home of their own.
For more information contact my office at any time. I’d be happy to send you a list of homes, condominiums or properties that meet your search criteria and price and talk about the different financing options that may be available to you right now.