It seems that today, everyone has accumulated enough opinion from the world around them that they have created in their mind their own theory about what the Boise real estate market is doing or will be doing this year.
One such popular housing theory is that — before a bona fide housing recovery can begin – the cost of owning a home versus renting one must return to historical levels. It seems simple enough to most people that if you could own your own home versus renting one for nearly the same price, you would.
If that belief is a truth, a national return to rising home prices may be in store for 2009.
Falling home prices coupled with falling mortgage rates, too, have dropped the relative, after-tax cost of owning a home to 125% of the cost of renting a home.
This is the exact 18-year historical average and not since 2001 has the gap been this small.
As reported by the Wall Street Journal, though, the study has some flaws. For example, the data doesn’t account for ongoing home maintenance costs, nor does it consider real estate tax bills and insurance policies. It also doesn’t take into account our local market and the factors that influence the Boise MSA.
But, combining a relatively low cost of ownership with the government’s $8,000 tax credit for first-time home buyers is likely to convert long-time renters into never-before homeowners.
This, too, is thought to be a key element of the housing recovery.
In many markets (but not all), home prices are expected to edge lower through 2009. Provided mortgage rates stay low, the cost gap between owning and renting will shrink even more.
As this gap narrows, now may be the time for you to consider a having me perform a Rent VS. Buy calculation for you and your situation. Contrary to popular belief, there are still good loans available for buyers, you just have to have a good team working for you in order to capitalize on it and secure you a good scenario. Call me 208-724-7602.
(Image courtesy: Wall Street Journal)
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Good article Aaron. Well written and researched. Bonus for using “objective” information too. It’s hard to get even bad news from a realestate agent. I appreciate your balanced approach!