In the American mind, renting has long symbolized striving rather than achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they're OK with renting it.
Home ownership is on the decline, and renting is on the rise. But the trend isn't limited to the housing market. Across the board, Americans are increasingly acclimating to the idea of giving up the stability of being an owner for the flexibility of being a renter. This may sound like a decline in living standards. But the new realities of our increasingly mobile economy make it more likely that this transition from an Ownership Society to a Rentership Society.
The unsentimental fact about the American dream is that Americans never really owned it in the first place. For the past three decades, especially, consumers haven't so much bought their quality of life as they've borrowed it from banks and credit card companies.
Now consumers are following the example of corporations, becoming more efficient. And it starts at home.
Housing is the biggest single component of consumption in the U.S. economy and the source of much of our present misery. The typical consumer spends about 32% of his or her budget on shelter. In the last decade, that generally meant borrowing a lot of money to take "ownership" of a home.
During the boom, the homeownership rate grew steadily, peaking at a record 69% in 2006.
Ownership-boosters failed to note that homes purchased in 2005 and 2006 with no-money-down, interest-only mortgages weren't really bought. They were simply rented until the "owner" flipped them or walked away from the mortgage.
In the post-bust climate, renting has emerged as a much more economically efficient way to pay for housing. A one-year lease represents a far less onerous financial obligation than a 30-year mortgage. It's difficult to get into too much financial trouble as a renter. The homeownership rate has fallen from its peak in 2006 to 65.4% today.
For an increasing number of Americans it makes more sense to rent. According to Moody's, by late 2011 it was cheaper to rent than to own in 72% of American metropolitan areas, (such as Roanoke) up from 54% a decade ago. And the more people who do it, the more socially acceptable and desirable it becomes. The decline in the ownership rate means that about three million more households rent today than did at the height of the bubble.
It's tempting to view the rise of renting as an economic step backward. But many would argue the rise of renting is a sign of a system adapting to new realities.
The U.S. economy needs the dynamism that renting enables as much as, or more than, it needs the stability that ownership engenders.
And the rising popularity of renting is hardly contained to the housing market.
Finally, perhaps, Americans are absorbing a piece of wisdom from Thoreau: "And when the farmer has got his house, he may not be the richer but the poorer for it, and it be the house that has got him."
Low mortgage rates and more affordable home prices in the Roanoke Valley are creating an interest in home ownership by those who live in apartments. However, potential buyers who are unprepared for the true cost of owning a home may be shocked by the bite home ownership can take out of their wallet in addition to their mortgage payments.
Inspection and Appraisal Fees
Before you purchase a home you need to pay for a home inspection, and an appraisal, possible even inspections for pests or radon. The costs of these inspections are borne by buyers and are a necessary protection to avoid buying a flawed property or paying too much.
Closing Costs
Buyers need to be prepared with the cash for anywhere from 2% to 4% of the mortgage balance depending on your area.
Taxes
As a homeowner, you'll need to pay property taxes, which are generally part of the escrow you pay into each month. Remember, even if you have a fixed-rate home loan, your property taxes could go up and increase your monthly housing costs.
Insurance
Your lender will require home insurance, the cost of which depends on factors including the construction materials of your home and the location. Even if you have renter's insurance, you'll find that home insurance costs more because you are paying for the ability to rebuild your home in addition to replacing your personal possessions. Insurance costs will rise over time, and you will need supplemental insurance if you live in a flood zone.
HOA and Condo Fees
If you buy a home within a homeowners' association or a condominium association, you'll be required to pay a monthly or quarterly fee. These fees can rise, or your association may need to charge a special assessment for projects such as repaving the parking lot or repairing a roof.
Utility Bills
Depending on where you live, your costs for electricity, gas and water could be higher when you move into your own home than when you live in an apartment in Roanoke, VA. You may also need to pay for garbage collection along with your Internet, cable and phone bill.
Furniture
While this is essentially a discretionary expense, most people who move from an apartment to a larger home need to buy at least some new furniture.
Lawn Care
Whether you handle your yard work yourself or hire a professional, you will have to pay something to keep your landscaping in check. Lawn equipment can be costly and you may need a leaf blower and other yard tools, too.
Maintenance
Home maintenance costs time and money. While you may be able to change your furnace filters, clean your gutters and keep your appliances running smoothly yourself, you may also need to hire a contractor to clean and inspect your chimney and to keep your heating and air conditioning system in top shape.
Repairs
While maintenance tasks can be predictable, the most costly part of home ownership typically comes with unexpected repairs such as replacing or repairing the roof, removing a tree, or paying for mold mitigation in a damp basement. The list of possibilities is endless, so homeowners should set aside savings for an emergency. Experts suggest budgeting for 1% or 2% of your mortgage balance as a yearly maintenance and repair fund.
The Bottom Line
Buying a home costs more than you think. If you don’t expect to stay in your home for at least seven to 10 years, contact West Wind Apartment Homes.
Perhaps you are relocating to Roanoke, VA and you have just started the search for a home. Regardless of where you are in your home search, consider some questions before you decide between renting and owning a home. Buying a home is a big commitment both financial and otherwise, so take the time to weigh pros and cons.
Here are a few questions you should ask yourself:
Will I own it for at least five years?
The first and most important question you should ask yourself before you consider buying a home is whether you will own it for a long time. People buy homes to increase wealth and five years, maybe even more today, is about the break-even point for earning appreciation in value. If you don’t plan on holding the property for longer than five or more years, don’t buy it! Renting a home is NOT necessarily throwing money away. Buying and selling quickly will usually leave you worse off financially.
Can I afford it?
It is more expensive to own a home than you think. Even if the mortgage lender qualifies you for the loan amount, you need to make sure YOU can afford it. Lenders don’t take into account home maintenance costs, child care expenses, health care expenses, expensive lifestyles and habits, etc. So make sure that you can comfortably afford your housing payment, still pay your other bills, and still save at least a little more for retirement. Also, if you are not sure of your continued employment situation, don’t buy a home.
Do I know about the neighborhood?
Did you do adequate research, look at enough properties, and learn the neighborhoods. If you just moved to Roanoke or if you don’t know the area, rent an apartment in Roanoke for a while. Get to know the city.
Once upon a time, college students dreamed of graduating and then buying a home and having a mortgage. Not so anymore.
With an uncertain economy, and more people moving to take jobs where they can find them, renting is what this generation is doing. More and more college graduates are renting an apartment in a beautiful apartment communities, complete with swimming pool, fitness center, volleyball courts and other apartment amenities.
For the first time in our history owning a home has lost its luster for the young. Since 2008, the percentage of young people who think that owning a home is “better than renting” has fallen.
Renting an apartment in Roanoke, VA has acquired a sort of cool respectability. Empty nesters figured it out a couple of decades ago, when they began getting rid of their high-maintenance houses.
Some of the forces driving the change are cultural. People are getting married later and they travel light longer.
Many are renting apartments because mortgages are hard to come by. There’s no stigma to renting anymore, and there’s just so much to keep you interested and busy in an apartment community.
Many people are told when they are younger that renting is only for
college graduates or people who cannot afford to buy. Many parents
hammer these ideas into their children and tell them that renting is
equivalent to throwing money away every month. Fortunately, today
people are beginning to finally think for themselves and challenge these
ideas. Here are 4 reasons to pat yourself on the back for deciding to
rent an apartment in Roanoke, VA at an HHHunt Community!
1. Renting can save money
At the very minimum you’ll be shelling out PITI for your home. That is:
1. Principal
2. Interest
3. Tax
4. Insurance
The PITI doesn’t include property maintenance like maintaining the yard,
paint, plumbing, repairs, decorating, etc… When you rent an apartment
at an HHHunt community, the monthly payment is almost always quite a bit
less than the PITI in your area and there are no maintenance expenses!
2. Homeowners’ tax deductions are overstated
According to research quoted by MSN, “… half of homeowners don’t get a
break, because even with mortgage interest and property taxes, their
total deductions do not exceed the standard federal tax deduction
($11,900 for couples and $5,450 for singles)”.
For these folks, it’s like spending $100 to save $20. They’re better off
saving the difference and investing it. Even if there is a “break” on
your taxes, you typically had to spend more than you would have spent
to rent to get back that $20 for every $100 spent in interest payments.
3. Renting gives you flexibility
For the up and coming young professional, you’re better off renting and
saving for a few years than to buy a small condo. Who knows how fast you
will outgrow it? When you own a home, you can’t always sell it when
you need to sell it at the price you want to sell it in order to accept a
new employment opportunity. If you have owned a home and don’t want
the constant maintenance responsibility, renting gives you the
opportunity to enjoy your weekends instead of completing that “to do”
list.
4. Our superb service teams!
Most apartment communitiesoffer 24 hour emergency maintenance and
technicians who are skilled in HVAC, plumbing, and electrical. At an
HHHunt Community, our service teams take great pride in offering prompt
and professional service to you. Whether you need a light bulb changed
or a new compressor for your AC unit, we are there to take care of you
as fast and efficient as possible. We are always a phone call or email
away and most service requests are performed on the same day or within
24 hours!
The housing market is stagnating right now in Roanoke and in other parts of the country and real estate brokers would have potential buyers believe that there is no better time than the present to buy a home. It is true, prices are down and mortgage rates are at all-time lows.
Unfortunately for the real estate brokers, many clients are not persuaded by that logic. Instead, in increasing numbers, they are choosing to rent instead of buy — unconvinced that the housing market has yet hit bottom. Would be buyers also understand that unless you plan to stay in your home for more than 10 years, buying a home may not be the right investment for everyone.
With apartments in Roanoke, VA, offering apartment amenities that can’t be found in homes, renting is a great option for many. There is also a broad mix of tenants at West Wind Apartment: young single residents and families and empty-nesters that no longer have homeownership on their wish list.
One of the most popular home ownership myths in Roanoke, VA is that owning a house is a huge tax break as compared to renting. I don’t know how many times people have personally told me that they want to buy a home because they NEED a tax deduction! I just shake my head in disbelief because I have done the math.
If your mortgage interest and other qualifying expenses such as charity contributions aren’t more than the standard deduction, ($11,600 for joint filers in 2011), there is no tax advantage to owning a home as opposed to renting anapartment in Roanoke, VA. Assume that you buy a $200,000 house with a 5% downpayment at a 6% interest rate. Your mortgage interest for the year would be $11,336. The Standard Deduction for joint filers is $11,600.
In this example, there is NO TAX BENEFIT. Even when there is a tax benefit, you most likely paid much more money to maintain the house than you are saving in taxes. If your mortgage interest is more than the standard deduction and you choose to itemize, there is little to no advantage.
For example, assume that your mortgage interest in 2011 is $15,000. You would get to deduct an additional $3400 if you itemize BUT you spent $15,000 in mortgage interest to save $850 on your taxes (assuming 25% tax bracket).
Don’t forget that you would also have all of the other expenses of home ownership that you would not have incurred when renting an apartment in Roanoke, VA in an HHHunt community.
Many people can tell you a list of reasons why you should buy a home. But as with everything else, it depends on who and where you are, in your life as well as your career. Despite the prevailing assumption that everybody, everywhere should settle down and buy their own home, research shows there are actually times and circumstances whenrenting might be better than buying.
Will you put in the time?
In any investment, there's no such thing as a sure thing. What usually makes real estate a better risk than most is time. The longer you commit to a property, the better your chances of seeing its value appreciate.
If it is likely in any way that you will move, change jobs or stay in the house for a short period of time, buying may not be a good idea. Letting go of a property before it has appreciated enough to cover the costs and commissions is not pleasant and if you bought with less than a 10% down payment, it could be brutal. Commission and closing costs will likely wipe out appreciation gains, if there were any. If the purchase was made with an even smaller down payment, chances are you'll come out at a substantial loss.
Will you like the neighborhood?
If you are new to a state, city or town such as Roanoke, research suggests you take ample time to acclimatize before investing money in a house and its neighborhood. If you are relocating to a place you hardly know, spend a year in an apartment in Roanoke until you're certain where and how you want to live.
Will you be happy giving up the freedom?
Initially at least, rentingis less financial pressure than buying. Paying a first and last deposit doesn't compare to the big chunk of change required for a down payment on a house. And even if you have enough savings, you could invest it otherwise and hope for significant capital gains. With current market volatility that may not seem prudent, but just imagine if you'd invested a typical down payment amount in the stock market ten years ago.
Renting gives you the freedom of time as well, with no yard or home maintenance projects. Renting is also lower risk because natural and other disasters the problems of the landlords.
Even though rents tend to increase by 3 percent a year, unexpected maintenance costs or sudden property tax hikes don't concern you either.
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In the American mind, renting has long symbolized striving rather than achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they're OK with renting it. 
Inspection and Appraisal Fees
Here are a few questions you should ask yourself:
Once upon a time, college students dreamed of graduating and then buying a home and having a mortgage. Not so anymore. 
The housing market is stagnating right now in 
