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Rising Rents Make Homeownership More Affordable

March 7, 2012

Renting costs are significantly increasing in the United States according to a recent study conducted by Marcus & Millichap. In the coming years, annual rental costs are expected to increase by an estimated 4%.  This is an annual rental increase of a full 1% over the previously reported 2011 increase of approximately 3%. The analysts predict that rising rents will adversely affect renters in 2012; it will lead more and more of them to homeownership in a desire to reduce housing costs, gain potential tax benefits, and create home equity rather than paying someone else’s mortgage and increasing their landlords net worth.

According to Marcus & Millichap projections, the monthly rent of a property will increase from $1,000 to $1,200 per month within a five year period.

Owning property is not always cost-effective, so it is important that potential home buyers work with an experienced real estate agent and accountant to discuss the costs of owning their own home. This would include things like mortgage interest, taxes, insurance, homeowners associations, and repairs, and should be compared with the cost of renting.  This includes the loss of principal that renters are basically paying on behalf of the property owner, and the loss of possible tax deductions. If the cost of renting surpasses the cost of purchasing, then now might be the time to consider buying a home. A home may not only become a place that provides shelter, but a home may also be an investment generating an increase in your net worth.

Research firm REIS describes 2011 rental increases for the largest and smallest rental increases in major U.S. cities:

Biggest increases:

Metro area Asking rent Annual increase
San Jose, Calif. $1,646 7.5%
District of Columbia $1,528 5.9%
Seattle $1,094 5.7%
New York $3,017 5.2%
Houston $828 5.2%
Orange County, Calif. $1,590 4.9%
Fort Worth $756 4.8%
Portland $877 4.6%
Tucson $683 4.3%
Greenville, S.C. $672 4.3%

Smallest increases:

Metro area Asking rent Annual increase
Las Vegas $811 0.9%
Wichita $523 1.2%
Jacksonville $806 1.2%
Orlando $878 1.3%
Syracuse $711 1.6%
Los Angeles $1,418 1.6%
Phoenix $763 1.7%
Tulsa $593 1.8%
Westchester County, N.Y. $1,892 1.9%
Atlanta $863 2.0%

According to the research firm REIS, Houston ranked 6th in 2011 annual increase in rental rates.  This bodes well for investors that participate in the ever-growing Houston economy.  Search HERE for all these Houston properties.

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One Comment leave one →
  1. April 17, 2014 10:41 pm

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    Like

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