Apartments Mooresville NC Blog

Is there still an appetite among young people to own their own homes? A survey suggested otherwise.

It showed that almost a half of those people currently renting would be happy to rent long term.

But as more people are forced into renting over the long term, could we really be approaching a sea-change in our attitude to property ownership?

There are lots of attractions to renting, not least the fact that any problems with the property have to be fixed by the landlord, not the renter. With no sudden maintenance costs to meet, renting can actually be a good long-term deal.

It's also worth bearing in mind that renters don't have to pay property taxes. Renters also avoid all the other costs that home buyers have to meet.

If you're renting, you have more flexibility in terms of moving. That fact resonates with all those people sitting with negative equity on their property.

The fact that they owe more than the property is worth means very few will be able to take the loss if they want to move. In other words, they're trapped.

The world has changed. The housing market has not risen since the crash in 2008 and as of yet is not climbing.  

Presently, the traditional view of the home being your most valuable asset doesn't apply.

Rather than risking your savings on a massive deposit and the associated property purchase costs, choosing to rent as a long-term decision could actually make sense.

Many renters, rather than viewing renting as a period between purchases, now see it as a better-value alternative to short-term ownership. Renting can help avoid making costly mistakes.

Long term, most believe that the property market will recover somewhat. But it may never reach the historic levels which turned generations of homeowners into speculators. In other words, the profits we've become used to may have simply gone.

Once you strip out the idea of a home being a financial investment, then you focus on finding the best home. And that could just as easily be a rented one.

If you are interested in renting an apartment in Mooresville, NC contact Abberly Green Apartment Homes.
 
The Independent

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:

Counter-intuitive 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