Renter's Market Benefits Consumers
An increasing number of consumers are beginning to realize that, for the moment, renting is actually a better financial decision than actually buying. This is in great contrast to past times when most consumers came to the realisation that buying was a better financial option than renting, as the money could then go towards creating home equity.
Nowadays, this is just not the case. Despite the continuing inflation in domestic rental costs, consumers often find it significantly less expensive to pay rent as opposed to the high monthly mortgage rates on a property of comparable size. In fact, some renters have been able to save as much as 50% by choosing to rent instead of buying.
This is due in part to steep increases in property values in some locations. Buyers who jumped at the chance to buy those properties are now realising that they now have no choice but to sell. Why is this a problem? In order to cover the balance owed on their mortgages, these homeowners must sell their homes at the same price that they purchased them for two years prior. With depreciation, this is just not possible. Renters will not pay more for a home than it is actually worth.
Even those renters who would qualify for mortgages are of the mind that they simply would not get "enough home for money", particularly considering that it would cost less to rent a bigger, or at least comparable home.
The shift in the market has caused many experts to quickly highlight that it is now no longer a buyer's market, nor is it a seller's market. Instead, it has now become a renter's market.
The concern that property values have not yet reached the lowest possible point, hase caused many renters to hold off on buying. They want to avoid a situation where they buy a property today which ends up being less valuable in just a few months. It is considered much more prudent to delay and observe the market trends for a probable end point before making the decision to buy a home. The approaching hurricane season is a source of concern to other renters. The hurricane season which devasted many areas just two years prior has not been forgotten; and in fact, homeowners within those areas, particularly those with no insurance, have still not recovered.
Though there is a deficit in the number of available rental properties in some areas, homeowners in other areas now recognize the added value off retaining their homes and delaying any decision to sell. They are even more reluctant to sell as they wait to see the proposed stabilization of the market. In the mean time, a number of these homeowners will resort to renting their homes in order to make ends meet, since there is a large number of renters waiting to make use of such an opportunity. Even those homes marked for sale on the market are available for rent. Renters of these properties must be willing to face the reality that their current places of residence must remain available for showings. Nevertheless, they still consider this arrangement to be a worth-while trade-off.
Potential investors who sought to jump in on flipping homes for quick profit now discover that renting their properties is now more sensible than attempting to sell them. In some instances, investors now begin to discover that they really have no other options when faced with an inablity to sell the properties and the obligation of making their monthly mortgage payments. For some, this may mean renting at a loss, which creates negative cash flow.
This has now become such a great problem that certain niche market landlords now find that they are forced to cut rents so as to allow for even a small cash flow volume. They have now come to the realisation that immediate rental at a loss is better than delayed rental for several months in an attempt to gain the desired rent amounts. Though landlords are usually upside down with regards to the majority of these properties, it has been proven that, for the time being, renting is the safest option.