Continue to Rent…or Buy? That is the Question
The picture on the left is a sign of the times. In May, this sign made headlines when a disgruntled passerby expressed how disgusted they were with the landlord who was asking $1,550/month in rent for a single bedroom unit located a block away from the trendy Mississippi Ave area in North Portland.
Here we are, four months later, and the market data continues to suggest that buying remains a better bargain than renting for one BIG REASON:
Low Interest Rates
Relatively low interest rates are making homeownership attractive to perspective buyers. In August, Bankrate.com reported an average rate for a 30-year fixed was just 4.19%, and a 15-year fixed averaged just 3.43%. These low rates help keep monthly mortgage payments low. Renters can’t take advantage of this monthly financing. According to Zillow Real Estate Research, renters can expect to spend 30% of their income on rent, while buyers can expect to spend 15% of their monthly income on a monthly mortgage payment, which contributes to a long-term investment. . Even if mortgage interest rates were to reach 6% next year, home buyers should still expect to spend 30% or less of their income on mortgage payments.
Take the current median home price in Portland of $318,000 for July 2015 with 20 percent down payment and a mortgage of $254,400, the payment for a 30-year fixed loan is $1,160.19 per month (excluding property taxes).
Renting is more unaffordable than ever, while purchase affordability is near an all-time high. If you are currently renting, but are entertaining the thought of owning, CALL ME TODAY. I’d love to help you find your dream home.