The National Association of Realtors recently issued a report showing that when the sales of homes slow down, the amount of rentals increase. Rented homes, whether in a house or an apartment, are what keep the housing market afloat during uncertain times. Unfortunately, renting is not necessarily better in the long run for consumers.
Why People Are Renting More Than Ever
According to the National Low Income Housing Coalition's annual report, 'Out of Reach,' one in seven U.S. households spend over half of income on housing, with low-income earners, minorities and first-time homebuyers taking most of the burden. With first-time buyers taking up about 40 percent of the market, everyone else who is a potential homebuyer has the ability to move into larger or more expensive homes.
Although housing prices have plummeted in recent months, the first quarter of 2008 is the 24th consecutive quarter that rentals have risen across the country. Such a huge increase in rentals suggests that more people are opting to stay away from the housing market. Part of the reason so many people flock to rented units is because of stricter lending terms.
Another possibility concerns how 'soft' the housing market is right now. Either way, renting seems to be the more popular option at the moment.
Why Buying May Be Better Than Renting
Contrary to the increase in renters, the Mortgage Bankers Association stated in a report that the number of purchase loan applications increased 5.4 percent from the previous week. On top of this, mortgage interest rates rose slightly, indicating that homebuyers are gearing up for the spring season instead of shying away from the lowered prices.
The housing market has suffered recently to be sure, but market fluctuations will lead to a slow but steady increase in buying. In other words, whatever goes down must come back up. As real estate agents prepare for the spring homebuyer season, there is a very likely chance houses will start to sell, especially those in foreclosure or generally pricier neighborhoods. With historically low interest rates and the FHA helping borrowers with paying off their subprime loans, the number of renters may actually go down in the next year.
