Buying a house vs. renting an apartment in Houston used to be a matter of priorities, finances, and objectives. However, the epidemic struck, and we now live in the “new normal.”
Housing prices soared to new highs this summer due to historically low home availability, cheap borrowing rates, and a competitive real estate market. The odds are stacked against buyers, not sellers. And the sweltering housing market shows no signs of abating.
So renting (rather than purchasing) can help you save money, enhance your chances of getting the property you desire in the future, and avoid a stressful purchase process.
Choosing between buying a house and renting an apartment is always a difficult option. However, for the time being, there are some significant benefits to renting.
Home prices have recently reached new highs.
Owning a property in the United States has never been more costly than it is now. The typical existing-home price increased to $363,300 in June 2021, according to the National Association of Realtors. This is a new high.
The median house price has increased by 23.4 percent from June 2020, the biggest increase since January 1999. There was a price increase in each of the four U.S. areas.
Furthermore, many homebuyers are willing to pay more than the asking price. In March 2021, 60 percent of renters in California and Colorado paid more than the stated price.
Prices have been gradually rising for almost a decade, and they don’t appear to be going down any time soon. For 112 months in a row, year-over-year increases have been maintained.
The cost of an apartment is more consistent.
During the epidemic, the average rent price increased as well, albeit not as much. Between June 2020 and June 2021, the cost of a one-bedroom apartment climbed by 4.63 percent countrywide. During the same time period, the rental price of a two-bedroom apartment increased by 3.43 percent.
Rent or a mortgage should not consume more than 30% of your total income, according to financial experts. Because the pandemic interrupted employment and earnings, many tenants are keeping a close eye on their finances in order to keep their housing expenditures under control.
According to a 2020 Entrata survey, the pandemic influenced 42 percent of tenants’ short-term housing plans. Instead of buying a home, 16 percent of renters polled extended their existing lease. To save money, 13% moved to a less expensive apartment. A further 7% chose to live with relatives or friends.
Home sales are increasing, and homes are selling quickly.
Not only are property prices up, but the quantity of home sales is as well. They also don’t last long on the market.
According to the National Association of Realtors, sales of existing single-family houses, condominiums, and townhomes climbed 1.4 percent between May and June 2021. The month of June saw a 22.9 percent rise in sales over the previous year.
The time it takes for a home to sell is also at an all-time low. According to the National Association of Realtors, the typical house was on the market for only 17 days in June.
Because there is a scarcity of housing, options are restricted.
Buying a house (rather than renting an apartment) is extremely difficult right now due to a housing supply constraint in the United States. According to Altos Research, there were half as many properties for sale (468,000) in February 2021 as there were a year earlier. Condos, townhouses, and single-family residences all contribute to this total.
Older homeowners who were at a higher risk of contracting the coronavirus stayed in their homes longer, reducing turnover. In such a competitive market, some homeowners were unable to obtain new housing, while others clung to their old home’s cheap mortgage during a period of financial uncertainty. During the epidemic, more boomers brought their college-aged and adult children back into the family home.
While the pandemic exacerbated the housing crisis, it did not cause it.
According to a research by the Rosen Consulting Group for the National Association of Realtors, the United States is experiencing a “underbuilding gap” of about 6 million housing units, a problem that goes back to 2001. The building sector was hit hard by the housing collapse of 2007-2008, and many construction employees had to find other occupations. During the pandemic, building prices rose because to a scarcity of supplies and supply chain delays.
“Contractors are facing extraordinary cost hikes, supply-chain disruptions, and personnel shortages, which have prevented companies from expanding their workforces,” says the report “Associated General Contractors of America’s senior economist, Ken Simonson, stated. In May 2021, he spoke with CNBC. In several areas, the number of available apartments has grown.
Many towns and communities are experiencing an increase in apartment inventory. Individuals are migrating out of apartment units as more people purchase homes. This implies that renters, particularly in specific cities and areas, have more alternatives.
Many downtown areas became silent as stay-at-home orders closed offices and non-essential enterprises. Renters didn’t need to be close to work any more, and they couldn’t take advantage of the restaurants and entertainment that dense urban centres generally provide. Extra space (both indoors and out) became a valuable commodity as people worked, studied, and socialized at home.
As a result, during the epidemic, several of the country’s most heavily populated cities suffered population losses. Surrounding suburbs and smaller cities witnessed increases. Many flats in city centers around the country become available as a result of this.
Landlords are providing incentives to tenants.
In city centers and markets where property prices fell during the epidemic, more availability offered substantial discounts and more freedom for tenants.
Early on, landlords were keen to offer flexible leases. Two-thirds of landlords provided short-term leases to at least 10% of its residents, according to a National Apartment Association poll issued in July 2020. This was higher from a year ago’s average of 7.3 percent. For short-term leases, several companies waived costs.
To entice renters, several property owners provided move-in incentives such as a free month’s rent or substantial discounts. Others eliminated incidental fees or lowered security deposits and pet deposits.
Renters were able to counteroffer and negotiate better terms as a result of this. Before the epidemic, many people moved to neighborhoods (and cities) that were out of their financial range.
The housing market is quite competitive.
Renters with a stable financial situation had more negotiating leverage. For potential house buyers, however, this was not the case.
Because there is a lack of inventory, more individuals are bidding for fewer houses. Houses move quickly, so interested buyers must submit offers quickly. Bidding wars are common, and properties are regularly sold for more than the asking amount.
Some purchasers prefer to pay in cash to complete the transaction. Others forego inspection and appraisal costs in order to remain competitive, trusting their fingers that they will not be forced to make costly repairs. Some people even send “love letters” to one other “to try to bribe sellers with presents, benefits, and incentives (which the NAR says might violate the Fair Housing Act) or to encourage sellers to select them (which the NAR says could violate the Fair Housing Act).
In many markets in 2021, owning any property is an accomplishment, not just your ideal home. Right now, renting is a lot less stressful.
Renting allows you to get a feel for a community before purchasing.
When you buy a house instead of renting an apartment, you’re typically stuck in a neighborhood you’re unfamiliar with. Renting allows you to get a taste of a city or area without committing to a long-term residence.
It can assist you in making a better informed decision about where you reside and determining whether or not a specific community is a suitable fit for you.
This is especially essential today, because the epidemic has altered many neighborhoods – and our expectations of them. Some companies failed to survive, while others sprang up to take their place, altering everything from traffic flow to a neighborhood’s feel.
Apartments on Westheimer are right in the middle of all the action, while Spring Branch apartments have more of a quiet neighborhood vibe, and apartments in Galveston while far from the city are like living on a permanent vacation.
Many of the patios, pedestrian zones, and outdoor meeting spots that were built during the epidemic have since become permanent landmarks. People who have developed a practice of exercising outside value parks, bike paths, and green areas more.
When you rent, you save money on upkeep and utilities.
Many tenants were badly impacted by the epidemic. According to the 2020 Entrata research, 78 percent of tenants decreased their expenditure as a result of COVID-related financial difficulties.
According to a survey conducted by the 2021 Apartment Guide, renters spent their first stimulus check in a variety of ways. The majority of people (19.96%) utilized it to pay their rent. However, paying for non-rental utilities came in second, at 18.29 percent.
Most renters have less expenditures because at least some utilities are generally included in the rent. Homeowners, on the other hand, must pay for heat, electricity, water, and garbage collection.
They’re also in charge of grass mowing and watering, landscaping, and keeping sidewalks and drives clear throughout the winter. These chores take time and necessitate the purchase of specialized equipment such as lawn mowers, hoses, and shovels. Adding expenditures is an extra strain at a time when tenants are trying to keep their finances in control.
It’s up to you whether to rent or buy.
Renting vs. purchasing a property is a personal choice that is based on your objectives, financial constraints, and priorities. However, in 2021, due to a highly competitive and costly housing market, renting provides a number of distinct benefits.