CNN is reporting a flattening of rental prices across the US as the mortgage meltdown continues to depress the real estate market. The article points out that rental prices do rise and fall independent of the traditional housing market but in many cases their is a connection between the two. In my opinion the flattening of rental prices is not going to help the situation.
Many potential buyers are waiting until the cost of owning a home is closer to what it costs to rent. If the cost for renting is significantly lower than buying those potential buyers will hold out until the costs are more in line with each other. To me this means that home prices still have a way to go until the bottom is reached. Once potential buyers see that they can buy a home and have a similar monthly payment as what they pay in rent they will start to buy. Until that day comes many will wait and continue to save their money while paying rent.
Wednesday, January 16, 2008
Rental Prices Flat. How will this Affect the Real Estate Market?
Subscribe to:
Post Comments (Atom)
2 comments:
I agree with you. I think values will continue to decline in most areas. In my neck of the woods it is far cheaper to rent than it is to buy.
Most of the prospective home buyers my office deals with are hesitant to jump in right now. There's still a lot of uncertainty in the market and the consumer can sense it.
I am torn on this issue. On one hand, being in the title industry means I am better off if more people are buying homes. On the other hand I am actually in the market to buy a home myself. I live in northern NJ and that means I can't find a house for less than $350K. The prices are going down (just a few years ago there was nothing under $400K in my area). So I want the prices to continue to fall so I can actually afford to buy but if nobody is buying I lose business. Catch-22 for me.
My wife really wants to buy so that might force my hand but if it were totally up to me I would hold off until the price of ownership was closer to the price it costs to rent.
Post a Comment