Thursday, August 2, 2012

For renters, buying a home pays off after three years on average

Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide.

The company, which lists for-sale and for-rent information on its site, has released a new analysis of what it calls the "break-even horizon," comparing what it would cost to buy or rent the same home in a number of U.S. markets over time.

The rent-or-buy calculus varies widely depending on where you live.

In the combined Los Angeles and Orange counties, the magic number is 4.3 years, assuming the buyer has made a 20% down payment. Buying wins out after only 1.6 year in the desert community of Banning. But Newport Beach residents must wait 14 years for buying to make more financial sense than renting.

The analysis takes into account a host of factors potential buyers should think about when considering the leap, including the down payment, mortgage and rental payments, buying and selling costs, property taxes, utilities, maintenance costs and tax deductions. The analysis adjusts for inflation and forecasts home value and rental price appreciation.

Zillow senior economist Svenja Gudell said the data should help homeowners get a rough and immediate sense of whether buying makes sense in a particular area in relation to their financial situation.

"For a home buyer out there, it is really tough to get a good grip on the buy-versus-rent decision," Gudell said. Although buying a home is a deeply personal decision, she said, the analysis gives consumers "a sense for 'Am I ready to make this decision?'"

The new take on the classic rent-versus-buy debate comes at a tenuous moment for the housing market. Many analysts believe that a housing bottom has been reached but don't expect a return to the heady days of the real estate bubble. There is already some concern about the strength of the recovery, with home sales slowing in June as inventory remained tight and buyers paid higher prices.

At the same time, rents are rising, housing affordability is at record levels, and mortgage interest rates remain very low. These factors are prompting many renters to consider homeownership.

Stuart Gabriel, director of UCLA's Ziman Center for Real Estate, noted that the main lesson from the subprime mortgage debacle and the housing bust was that homeownership shouldn't be pushed at all costs. Federal policy has been adjusted to support this new point of view.

"One of the things we have learned in recent years is, obviously, house prices don't always go up, and even over the very long term in certain markets homeownership may only offer a minimal return," Gabriel said.

"What we have all learned is to treat homeownership as a bit of a dangerous animal. You know it's not always good, and it's not good for everyone."

Things to consider when buying, particularly in an slowly appreciating market, include how mobile will you be, your financial situation, marital status, career goals and personality, Gabriel said.

Richard Green, director of the USC Lusk Center for Real Estate, added that in many regions buying has become increasingly attractive compared with renting. There are also non-financial reasons for buying.

"I can enjoy living in this house for the rest of my life, and nobody can throw me out of it," he said. "You are consuming something, and you have control over it, and control has some value."

Zillow's analysis, which covered more than 200 metropolitan areas and 7,500 U.S. cities, found that buying is a better financial decision than renting in the Riverside-San Bernardino area if you live in the home for at least two years. That rises to 3.2 years in the area including Oxnard, Thousand Oaks and Ventura.

The San Francisco metropolitan area's break-even score of 5.9 years encompasses a range from two years to 24.3 years.

City Offers Free Bike Racks and Installation for Businesses

Do you or your customers frequently bike to your place of business? If so, take advantage of the City of West Hollywood’s new program that offers free inverted-U bike racks to area businesses. In an effort to become a more bike-friendly community, the City of West Hollywood is one of the first in the nation to offer free bike racks and installation on public right-of-way and easily accessible private right of ways for businesses. The bike rack program is being funded through a grant by Metro’s Bicycle Transportation Account. The grant is focused on providing safe and convenient parking to bicycle riders throughout the city.

Bicycle racks provide easily accessible and quality short-term parking options for customers and visitors. Inverted-U bike racks are designed to park two bikes with two points of contact. These racks provide a stable and secure location to park bikes and are virtually maintenance free.
The public right of way is City owned property, such as sidewalks, street parking spaces and the street itself. The private right of way is property owned by a private entity and not by the City of West Hollywood. The City will provide bike racks on private right of ways that are easily accessible from public right of ways. Bike racks will not be provided by the City in areas that excludes the general public, such as inside parking garages.
For more information, or to request a bicycle rack to be installed near or on your business property, please call (323) 848-6328 or visit, www.weho.org/bikeweho  to complete an application.

Jason Cook for your Real Estate Needs


I specialize in the Los Angeles West Hollywood area. I would love to work with you to fulfill your Real Estate Needs.

Jason Cook
Coldwell Banker Residential Brokerage
323-380-0995 (Office)
661-317-6900 (Cell)
JasonRCook@sbcglobal.net (Email)
www.WestHollywoodCaHomes.com (web)

I look forward to hearing from you.