In the American mind, renting has long symbolized striving rather than achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they're OK with renting it.
Home ownership is on the decline, and renting is on the rise. But the trend isn't limited to the housing market. Across the board, Americans are increasingly acclimating to the idea of giving up the stability of being an owner for the flexibility of being a renter. This may sound like a decline in living standards. But the new realities of our increasingly mobile economy make it more likely that this transition from an Ownership Society to a Rentership Society.
The unsentimental fact about the American dream is that Americans never really owned it in the first place. For the past three decades, especially, consumers haven't so much bought their quality of life as they've borrowed it from banks and credit card companies.
Now consumers are following the example of corporations, becoming more efficient. And it starts at home.
Housing is the biggest single component of consumption in the U.S. economy and the source of much of our present misery. The typical consumer spends about 32% of his or her budget on shelter. In the last decade, that generally meant borrowing a lot of money to take "ownership" of a home.
During the boom, the home ownership rate grew steadily, peaking at a record 69% in 2006.
Ownership-boosters failed to note that homes purchased in 2005 and 2006 with no-money-down, interest-only mortgages weren't really bought. They were simply rented until the "owner" flipped them or walked away from the mortgage.
In the post-bust climate, renting has emerged as a much more economically efficient way to pay for housing. A one-year lease represents a far less onerous financial obligation than a 30-year mortgage. It's difficult to get into too much financial trouble as a renter. The homeownership rate has fallen from its peak in 2006 to 65.4% today.
For an increasing number of Americans it makes more sense to rent. According to Moody's, by late 2011 it was cheaper to rent than to own in 72% of American metropolitan areas, (such as the Richmond area) up from 54% a decade ago. And the more people who do it, the more socially acceptable and desirable it becomes. The decline in the ownership rate means that about three million more households rent today than did at the height of the bubble.
It's tempting to view the rise of renting as an economic step backward. But many would argue the rise of renting is a sign of a system adapting to new realities.
The U.S. economy needs the dynamism that renting enables as much as, or more than, it needs the stability that ownership engenders.
And the rising popularity of renting is hardly contained to the housing market.
Finally, perhaps, Americans are absorbing a piece of wisdom from Thoreau: "And when the farmer has got his house, he may not be the richer but the poorer for it, and it be the house that has got him."
Low mortgage rates and more affordable home prices in the Richmond area are creating an interest in home ownership by those who live in apartments. However, potential buyers who are unprepared for the true cost of owning a home may be shocked by the bite home ownership can take out of their wallet in addition to their mortgage payments.
Inspection and Appraisal Fees
Before you purchase a home you need to pay for a home inspection, and an appraisal, possible even inspections for pests or radon. The costs of these inspections are borne by buyers and are a necessary protection to avoid buying a flawed property or paying too much.
Closing Costs
Buyers need to be prepared with the cash for anywhere from 2% to 4% of the mortgage balance depending on your area.
Taxes
As a homeowner, you'll need to pay property taxes, which are generally part of the escrow you pay into each month. Remember, even if you have a fixed-rate home loan, your property taxes could go up and increase your monthly housing costs.
Insurance
Your lender will require home insurance, the cost of which depends on factors including the construction materials of your home and the location. Even if you have renter's insurance, you'll find that home insurance costs more because you are paying for the ability to rebuild your home in addition to replacing your personal possessions. Insurance costs will rise over time, and you will need supplemental insurance if you live in a flood zone.
HOA and Condo Fees
If you buy a home within a homeowners' association or a condominium association, you'll be required to pay a monthly or quarterly fee. These fees can rise, or your association may need to charge a special assessment for projects such as repaving the parking lot or repairing a roof.
Utility Bills
Depending on where you live, your costs for electricity, gas and water could be higher when you move into your own home than when you live in an apartment in Glen Allen, VA. You may also need to pay for garbage collection along with your Internet, cable and phone bill.
Furniture
While this is essentially a discretionary expense, most people who move from an apartment to a larger home need to buy at least some new furniture.
Lawn Care
Whether you handle your yard work yourself or hire a professional, you will have to pay something to keep your landscaping in check. Lawn equipment can be costly and you may need a leaf blower and other yard tools, too.
Maintenance
Home maintenance costs time and money. While you may be able to change your furnace filters, clean your gutters and keep your appliances running smoothly yourself, you may also need to hire a contractor to clean and inspect your chimney and to keep your heating and air conditioning system in top shape.
Repairs
While maintenance tasks can be predictable, the most costly part of home ownership typically comes with unexpected repairs such as replacing or repairing the roof, removing a tree, or paying for mold mitigation in a damp basement. The list of possibilities is endless, so homeowners should set aside savings for an emergency. Experts suggest budgeting for 1% or 2% of your mortgage balance as a yearly maintenance and repair fund.
The Bottom Line
Buying a home costs more than you think. If you don’t expect to stay in your home for at least seven to 10 years, contact The Gardens Apartment Homes.
In today's real estate market it's not surprising if people are a bit gun shy about buyinga home. Some questions that potential homeowners are considering:
What if I can't afford my mortgage in the future?
What if my home loses so much value that I eventually owe more than it's worth?
What if I have to move in a few years and can't sell my home?
If you've ever asked yourself these questions about home ownership, it could be time for you to look into renting versus buying a home. Believe it or not, sometimes it makes more sense to rent anapartment in Glen Allen, VA rather than own. Here are 3 tips to help you figure out which option—renting or buying—makes the most sense for you.
Evaluate whether you have a steady income to support paying a mortgage.
Make a time line of how long you plan to stay put. If you anticipate staying in a home for only one or two years, it is unlikely that you will see a significant financial return on your investment.
Crunch the numbers before making your decision. When buying a home, you have to take into consideration your mortgage payments as well as real estate taxes, insurance payments, and the maintenance costs. With renting a home, calculating month-to-month housing expenses is as easy as inquiring about the monthly rent and average utilities.
Perhaps you are relocating to the Richmond area and you have just started the search for a home. Regardless of where you are in your home search, consider some questions before you decide between renting and owning a home. Buying a home is a big commitment both financial and otherwise, so take the time to weigh pros and cons.
Here are a few questions you should ask yourself:
Will I own it for at least five years?
The first and most important question you should ask yourself before you consider buying a home is whether you will own it for a long time. People buy homes to increase wealth and five years, maybe even more today, is about the break-even point for earning appreciation in value. If you don’t plan on holding the property for longer than five or more years, don’t buy it! Renting a home is NOT necessarily throwing money away. Buying and selling quickly will usually leave you worse off financially.
Can I afford it?
It is more expensive to own a home than you think. Even if the mortgage lender qualifies you for the loan amount, you need to make sure YOU can afford it. Lenders don’t take into account home maintenance costs, child care expenses, health care expenses, expensive lifestyles and habits, etc. So make sure that you can comfortably afford your housing payment, still pay your other bills, and still save at least a little more for retirement. Also, if you are not sure of your continued employment situation, don’t buy a home.
Do I know about the neighborhood?
Did you do adequate research, look at enough properties, and learn the neighborhoods. If you just moved into town or if you don’t know the area, rent an apartment in Glen Allen for a while and get to know the city.
For information on The Gardens at Twin Hickory in Glen Allen, VA, contact us.
"Get rich from renting". That’s what smart money columnist advises. Forget the conventional wisdom about renting. It turns out that renting is one of the smartest investments you can make.
In fact when economists run the numbers they find that renters save an average of $560 every month just by choosing to rent over buying a house.
And don't worry about losing out on the investment potential of a house. Renting allows you to use your "down payment money" for other investments, which provide a higher return than real estate, even in a booming housing market.
As a case in point, a $100 investment in housing in 1985 would be worth $293 today, while that same $100 placed in stocks would be worth $1146 - nearly four times as much.
When you add up all of the potential liabilities of home ownership - hidden maintenance and insurance costs, rising property taxes and potential price drops - renting is a smarter choice from the start.
The housing market is stagnating right now and real estate brokers would have potential buyers believe that there is no better time than the present to buy a home. It is true, prices are down and mortgage rates are at all-time lows.
Unfortunately for the real estate brokers, many clients are not persuaded by that logic. Instead, in increasing numbers, they are choosing to rent instead of buy — unconvinced that the housing market has yet hit bottom. Would be buyers also understand that unless you plan to stay in your home for more than 10 years, buying a home may not be the right investment for everyone.
With apartments in Glen Allen, VA, located near downtown Richmond, offering apartment amenities that can’t be found in homes, renting is a great option for many. There is also a broad mix of tenants at The Gardens Apartment homes: young single residents and families and empty-nesters that no longer have homeownership on their wish list.
One of the most popular home ownership myths in Richmond, VA is that owning a house is a huge tax break as compared to renting. I don’t know how many times people have personally told me that they want to buy a home because they NEED a tax deduction! I just shake my head in disbelief because I have done the math.
If your mortgage interest and other qualifying expenses such as charity contributions aren’t more than the standard deduction, ($11,600 for joint filers in 2011), there is no tax advantage to owning a home as opposed to renting anapartment in Richmond, VA. Assume that you buy a $200,000 house with a 5% downpayment at a 6% interest rate. Your mortgage interest for the year would be $11,336. The Standard Deduction for joint filers is $11,600.
In this example, there is NO TAX BENEFIT. Even when there is a tax benefit, you most likely paid much more money to maintain the house than you are saving in taxes. If your mortgage interest is more than the standard deduction and you choose to itemize, there is little to no advantage.
For example, assume that your mortgage interest in 2011 is $15,000. You would get to deduct an additional $3400 if you itemize BUT you spent $15,000 in mortgage interest to save $850 on your taxes (assuming 25% tax bracket).
Don’t forget that you would also have all of the other expenses of home ownership that you would not have incurred when renting an apartment in Richmond, VA in an HHHunt community.
These days, real estate brokers are dealing with declining home sales and would have their clients believe that there is no better time than the present to buy a home. Prices are down and mortgage rates are at all-time lows.
Unfortunately for the brokers, many clients are not persuaded by that logic. Instead, in increasing numbers, they are choosing to rent — unconvinced that the housing market has yet hit bottom.
With apartments in Glen Allen, VA in fabulous locations and offering amenities that can’t be found in homes, renting is a great option for many. There is also a broad mix of tenants: fewer young transient residents and more families and empty-nesters that no longer have homeownership on their wish list.
Nationally, vacancy rates for apartments are projected to drop to 4.6 this year, down from 5% currently. “Anything below 5% is a landlord’s market,” said Walter Molony, a spokesman for the National Association of Realtors.
When deciding whether to rent or buy, you are making the choice to rent an apartment home or renting the capital needed to buy a home. Most Americans don't consider that they are renting equity (from the bank) to buy a home. As you are aware, very little equity is built in the first few years of paying a mortgage. Many people are surprisingly still very unaware of this fact.
This following article explains how renting is financially better than buying in about 75% of cases!
For the Past 30 Years, Renting Was Generally Better Than Buying
If homeownership is the American dream, then the nation had better wake up. That's the message from a new research paper that examines whether buying or renting a home was a better financial decision over the past 30 years. Most would find the result surprising: over the period Americans were better off renting between 65% and 75% of the time, depending on the investment alternative.
The article essentially looks at eight-year periods and assumes that a person invests the money he or she saves by renting. Since buying is generally more expensive than renting, renters have extra money to invest. It also makes a number of assumptions favorable to homeownership, including gains from the mortgage interest tax deduction, the option to refinance, and the ability to walk away -- loss-free -- from an underwater mortgage. Still, renting wins approximately three-quarters of the time.
The staff at economic research organization e21 explains why this result actually shouldn't be so shocking:
Counterintuitive as the finding may be to some, it is actually quite logical. Unless someone possesses the cash necessary to buy a residence, he or she will be renting one way or another. The choice is between renting the property directly or instead renting the capital necessary to buy the property. The amount of capital to be rented is a function of house prices, while the bulk of a mortgage payment is interest, which is the rental payment on this capital. After 2 years, the typical 30-year amortizing mortgage balance has been reduced by less than 3%. This means that a household that took out a $300,000 mortgage with a 5% interest rate to buy a home has only reduced its mortgage balance by $8,600 after two years despite spending nearly $39,000 in total over this period.
Housing advocates may respond by pointing out that at least the $8,600 in this scenario went towards home equity rather than simply being squandered on rent. But, as demonstrated in the Real Estate Economics article, the principal component of each mortgage payment - i.e. the portion of the mortgage payment that goes towards reducing the principal mortgage balance instead of interest - is an added expense renters don't have.
This turns the real estate industry's biggest talking point on its head: you aren't throwing rent into the wind each month, you're casting away equity.
Of course, that equity also provides a potential benefit. The analysis's eight-year rolling methodology appears to miss the biggest reward of owning a home: living rent-free once the home is paid off. After that 30-years is up, the longer a family remains in that home rent-free, the more buying pays off. Taking this into account would almost certainly change the result in some, if not all situations. Renting may be a better option initially, but there's no eventual reward.
An important point still needs to be made here: buying a home that you don't plan to live in for an extended period of time probably isn't a great idea. The rent you pay in the form of interest on a 30-year loan for five or even 10 years won't be any better than if you had just rented outright. But if you're planning on living in a home for 30-plus years, then you could potentially get some benefit from buying rather than renting.
Original article by By Daniel Indiviglio, The Atlantic
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In the American mind, renting has long symbolized striving rather than achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they're OK with renting it. 
Low mortgage rates and more affordable home prices in the 
Perhaps you are 
The housing market is stagnating right now and real estate brokers would have potential buyers believe that there is no better time than the present to buy a home. It is true, prices are down and mortgage rates are at all-time lows.
