Rental Market Pricing You Out? Buying a Home May be a Better Bet
buying-a-home | Read Time: 3 minutes
By Jeffrey M. Ruben | Published: June 2022
For the past several months, home prices have been rising at rapid rates, making it difficult for prospective homebuyers to find the right home because of a tight and highly competitive market.
At the same time, rental costs have been rising to high levels that make it hard for people to find units they can afford. In fact, a recent WSFS Mortgage survey found that 66% of renters in the Greater Philadelphia and Delaware region feel that rising rents and competition for units have made it harder to afford where they live.
While the homebuying market remains competitive, renters may be better off in the short-and long-term if they invest in buying a home. Realtor.com’s May 2022 Monthly Housing Market Report saw a 6.3% increase in new listings nationally compared to a year ago, indicating inventory level issues could be starting to ease.
Here’s why buying now should be considered and how you can get started.
Buying Provides Cost Certainty
Whether you are currently renting and extending your lease, or searching for a new unit, your new lease is likely going to include a significant increase in monthly rent. In addition to competition for rentals, spiking prices, inflation, and materials shortages may impact landlords’ costs for repairs, appliance replacements, and other necessary investments into their property; some of these costs are being passed to tenants through increased rents and security deposits.
While renters don’t have much control over these factors, buying a home offers a degree of cost certainty when locking in an interest rate and securing a mortgage for a home. Just remember to work closely with your lender to make sure other costs are factored in, like property taxes and insurance, so you can budget accordingly.
Owning Your Home Helps Build Wealth
Buying a home is an investment in both your present and future. In the present, you are establishing cost certainty. For the future, you are building equity as you pay down your mortgage over time, and presumably, increasing the value of your home.
Owning real estate is a great way to build wealth, along with other investments, such as your employer’s 401(k).
Get Started by Teaming Up with a Realtor and Lender
The first step in making any large purchase is understanding all the potential associated costs. Having a realtor that knows the area well can help you pinpoint neighborhoods that best fit your wants and needs for now and the future.
Many realtors also know mortgage lenders they can refer you to. However, make sure you are comfortable with your lender, as buying a home is most likely the largest purchase you will make in your life. Make sure your lender is taking a consultative approach to determine how much home you can buy and all your upfront costs.
Learn About and Discuss Assistance Programs
Speaking of upfront costs, do your own research and speak candidly with your lender about what you feel comfortable spending and what options are available to you for help with down payments, closing costs, and other move-in expenses, like utility deposits.
Check with your employer to see if they have home purchase assistance programs, as well as your local and state government programs. Your realtor and lender can also help identify these programs and more, including Federal assistance programs and grants.
Also, check with your lender about their own homebuying assistance programs that offer not only cash, but educational resources too.
Finally, make sure you have all your finances and paperwork to get pre-approved for a mortgage. By doing this before making any offers, you’ll make yourself a more attractive homebuyer and potentially have a leg up on your competition.
About the Author – Jeffrey M. Ruben
Jeffrey M. Ruben, President, WSFS Mortgage, joined WSFS through its acquisition of Array Financial, a full-service mortgage banking organization, and Arrow Land Transfer in August 2013. Jeff formed Array and Arrow in 2005, having previously held senior executive roles at financial and legal institutions.
Mortgage Rates Are Still Rising, and So Are Selling Prices. Here’s How to Adjust Your Buying Approach
There is no question about it. We are in a different homebuying environment than we were even six months ago. Mortgage interest rates continue to rise and have now exceeded pre-pandemic levels, while home prices have stayed high amid continued competition. In some cases, potential homebuyers have been priced out of the market.Read More
WSFS Down Payment Grant Program Helps Eligible Borrowers Achieve the Dream of Home Ownership
For many families in the Greater Philadelphia and Delaware region, the dream of owning a home can seem financially daunting, even out of reach. While there are many local, state and federal programs designed to help homebuyers achieve this dream, coming up with upfront costs, such as down payment and closing expenses, can be challenging, especially in low- to- moderate income areas.Read More
What to Look for When Building Your Homebuying Team
With mortgage rates rising, the homebuying market remains hot and very competitive, with inventory strains continuing to affect home prices. Despite these challenges, if you are in the market for a new home, now is the time to act as prices and rates may continue to rise through at least the end of 2022. And if you wait, you will pay more for the same home later than you would now.Read More
WSFS Mortgage Offers New Program to Help Customers Realize Their Dream of Homeownership
For many aspiring homebuyers, the biggest challenge to achieving their dream of homeownership is the upfront costs. Add in rising prices, stiff competition and bidding wars for houses over the past year, and the obstacles can seem overwhelming.Read More
Inflation, Rising Costs for Home Purchases and Rentals Making It Harder for People to Afford Where They Want to Live, WSFS Mortgage Survey Finds
Nearly two-thirds (66%) of Americans are having trouble saving for a new home or rental due to rising costs for everyday needs, and an equal percentage of renters are struggling to compete for and afford units where they live due to rising rent, according to a new WSFS Mortgage survey. The study, which surveyed 1,530 Greater Philadelphia and Delaware region consumers and 1,500 consumers nationally, examines the economic impacts of inflation, rising costs, reduced housing inventory and geographic preferences of homebuyers, homeowners and renters ages 25-65.Read More