Rental market getting pricey, yet another reason to buy; if you’re not one of the reasons rental prices are rising

With the real estate market in a distressed state for the last five years generating a ton of foreclosures and short sales, those former home owners still need a place to live, which has been steadily causing the rental market to heat up. As the Oregonian, on their online outlet OregonLive.com, reports┬áthe vacancy rate is a tiny 3.63% and rents have increased an average of 6.1% since the same time last year. Another reason cited for the rise in rental rates and decline in vacancies is more and more young people are living by themselves which has lent to a 30% rise in rates for studio apartments over the last two years! That’s huge!

Early in the article it pegs the average one bedroom rental at $774/month then later pegs the average Portland rent at $831/month. This of course brings me full circle back to real estate as I’m NOT a believer in renting (but I am a believer in owning rentals) and that’s not just because I’m a Realtor, it’s because renting is a waste of money. Of course, if you know your next living space will be temporary and fairly short term, then heck, yes, rent (I would, and I don’t like renting anything). However, if you know you will be in the area for a number of years, credit is reasonable and you have a stable job, that same $831/month can get you into any number of homes available out there for up to around $185,000 at current rates and the down payments are still small (and in rural USDA areas, like Sandy, Estacada etc there are STILL ZERO down loan programs folks). So why are you still renting? You pay $X/month every month and get nothing, zero, zip in return when you move where as when you buy, historically, at the very least will get most of what you paid out of pocket back when you sell the house (or, often, more!) essentially meaning you lived there for free, or made money living there…a heck of a lot better then renting!

Of course, there’s always the risk that we can end up back in the market that we have been in for the last five years and you lose money instead…however, that loss is only “realized” if you sell. If you stay, make you’re payments and weather the storm of a troubled market, you’ll likely do fine selling it down the road or you could make that home you’re first rental when you’re ready to move.

My two cents.

Getting back to this posts subject line of “if you’re not one of the reasons rental prices are rising”; that is referring to the folks that were unfortunate enough to experience a foreclosure or short sale first hand. After going through such a process you’re not likely to be able to buy a home again for another two years (short sales) or up to 3-5 years (foreclosure). Do not fret however, if you do want to become a home owner again as soon as possible give your lender a call, or give me a call and I can refer you to one of mine. Lenders are often great resources for putting together a game plan to get you back to being a home owner quickly and though each situation is different, I have heard of many situations where someone was back, owning a home in just a year.

~Scott McDonald

 

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