Showing posts with label Rent vs. Buy. Show all posts
Showing posts with label Rent vs. Buy. Show all posts

4/21/2020

Owning vs. Renting - What Is the Comparison?



House, Owning vs Renting, April 2020
Click to enlarge
It's worth a look to find out what the difference is between renting and owning.
Let's say you're currently paying $2500/month in rent and you're thinking how nice it would be to own instead.  Based on a single family home price of $500,000 (it could be less if you're looking at condos, but remember to include HOA fees), and a down payment of 10% ($50,000), you could come out ahead in the local market after 4 years.  This is assuming a loan at around 3.63%, hazard insurance, home maintenance at .5% ($2500 annually), annual home appreciation of 2.5%, annual rent appreciation of 2.5%, and a gross household income of between $77,000-$165,000 where your tax savings might be about 22%.





Condo, Owning vs Renting, April 2020


The second graphic is for a condo at $400,000, monthly HOA dues of $275, gross household income up to $77,000, and a loan down payment of 5% ($20,000) and home maintenance cost of about .1% annually (that depends on numerous factors not included here).  A condo purchase like this one has an earlier date for breaking even, but notice the differences in equity.


These are samples of course, but based on standard Los Angeles County property tax rate of 1.25% (increases over time), and an HOA dues level which could be higher or lower depending on luxury vs basic HOA, and other factors. It's not guaranteed that the home growth rate will continue at it's present rate.  It's intended to be an example so that a prospective buyer might think about his/her capability to buy.

Many people prefer to rent, but many people have incomes and savings which could allow them to buy and obtain home equity benefits and tax savings.

If you have a sample scenario you want to try, just contact me!

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

2/12/2020

Takeaways From the PWR 2020 Economic Summit

About 1,000,000 people have left California since 2010
  • Pacific West Association of REALTORS held its meeting in  Garden Grove today on current real estate topics state wide and locally:  
  • There are two Proposition 13s coming up:  One is a new proposition on the March 3rd ballot dealing with a bond for school construction debt; the other is the well-known Proposition 13 issue from 1978 appearing on the November ballot and dealing with the Split Roll Tax Initiative where commercial properties, not residential properties, would be restructured for their property taxes if voted in, with the objective of commercial properties paying higher tax than currently (did you know that over time residential properties have been increasing thereby carrying a tax burden not enjoyed by commercial properties).  Don't confuse the two.
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  • Proposition 5 will hopefully obtain enough signatures to be back on the  November ballot, and partially rewritten from its last ballot appearance when it was defeated.
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  • The State is in the longest post recovery period from a recession ever, over 10 years!
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  • The U.S. unemployment rate is down to 3.5%, the lowest rate ever; while the overall California unemployment rate is at 3.9%, but this varies by county.
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  • The corona virus effect is global, and is affecting the supply chain around the world, for instance, Toyota in China is just one of many places currently unable to produce for the world market. The next 6 months may see continuing impact, globally and locally, even affecting prospective foreign buyers here.
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  • The California population was 20 million in 1970, it's now double that at 40 million people.
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  • The housing market typically slows before major elections, there is no correlation to political parties.
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  • Housing prices are most often referred to when dealing with "up" or "down" trends, yet the  annual number of residential transactions hasn't changed for the last 10 years!
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  • From 2003 to the present, home prices have increased by 53%!
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  • Where are sales headed?  Perhaps with higher prices, but not with more inventory.  Inventory has been constrained at the same level since 2012.  May now be the new normal at 2-3 months of inventory.
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  • Statewide, the average time on market is 28 days; in the ultrahigh luxury market, the average time on market is 39 days.
  •  Many college age young adults want to be able to buy their own home.

  • Buyers want a "Pinterest" home, their expectations are high.
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  • The Los Angeles County median home price is $641,000; the Orange County median home price is $840,000, with the lowest inventory in 15 years.
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  • Where is the fastest rising price increase?  City of Norwalk.
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  • It's predicted that by 2025, California will be a majority renter state.
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  • California property owners need to change their image of what increased density might look like in their neighborhood--developers too.  New multifamily housing does not have to have the "cell block" look, there are more elegant designs which could blend well into single family home areas.
REALTORS are represented in 90% of sales, a figure that hasn't changed in 30 years.

Thanks to Leslie Appleton -Young, California Association of REALTORS Chief Economist.

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

1/19/2017

Here Are 5 Good Reasons to List Now




Have you thought about selling your investment or residential property over the last five years? Here are five reasons now may be the time.
1. We are experiencing selling price increases, so the market may be much different now compared to when your property was last for sale. Here are some statistics, according to California Regional Multiple Listing Service data: Long Beach average home prices rose by 6.6 percent, and the median home price rose 8 percent, over the last 12 months through December 2016. The California home price average is expected to increase by 4.6 percent in 2017.
2. The inventory of available homes for sale continues to decrease from what it was just one year ago, making the competition among sellers considerably lower. The local market as of December is at 1.6 months or less of inventory (6 months is the traditional norm). 
3. Mortgage interest rates are still at record lows, in December only slightly higher than the lowest of all rates which was also in 2016, making homeownership more affordable and bringing new buyers into the market. And where are sellers moving to? There were over 24,000 sales in the top 50 master-planned communities in the country in 2016, an increase over 2015.
4. Rental rates are still rising dramatically for tenants. And if you bought a rental property after 2008-2010, you probably have some price increase in case you're thinking of a 1031 exchange.
5. While we cannot predict the affordability of the 2017 market completely, more millennial buyers (under 34 years) and buyers returning to the market from years of renting are entering the homebuying market. I handle the headache and also work closely with clients in selling homes for out-of-state owners. You can even leave your tenant in the home in many cases.
Contact me for a free valuation of your property or to find out what makes me different from my competition.
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