- "Double-Dip Threatens Housing Recovery",
- "Housing Lifts Recovery Hopes",
- "Delinquencies Rise, Housing Still Weak"
What is the most important housing statistic for seller?
If there is one number we pay attention to at Owners, one statistic that directly impacts buyer's decisions it is this: the gap between the cost of buying and renting. Buyers don't care about regional trends or median prices. They certainly appreciate government programs that give tax breaks and favorable mortgage terms, but in the end it all boils down to one key calculation: is the monthly cost of buying a home competitive with the cost of renting.
Most renters would prefer to buy if the cost is equal or close. This statement seems obvious but it uncovers some basic facts about housing. Both renters and owners need a place to live but there is both strong emotional and financial value to owning and controlling your home vs renting. If the gap between owning and renting is small this also means investors are more willing to buy homes because the income they can generate from renting will cover or come close to paying their interest costs. In short property becomes competitive with other investments.
In markets like Las Vegas or Phoenix where prices have fallen significantly there is a rising number of possible buyers and the number of home sales are starting to pick up.
A recent Associated Press analysis of 45 markets found that the gap between owning and renting has shrunk from $777 per month to $221 in the last 3 years. Cleveland, Atlanta, Indianapolis and St. Louis all have average gaps of less than $100. In Los Angeles, New York City and San Francisco the gap remains high and it is still much cheaper to rent than own
For home sellers this information can help in two ways:
- Look at comparable rents for your home and mention them in your description, it might stimulate investors to consider your property.
- Consider targeting local renters with fliers at near buy apartment building and in Craigslist.org, you might find someone ready to make the leap.