Hence, we can expect a lot more foreclosures to hit the market, and those of you in the first time homebuyer market will likely stay busy for quite some time. And, those of you not in the first time homebuyer (or investor) market might want to consider jumping in.
Barney Frank stated recently that there might have been too much emphasis placed on “Home Ownership”; maybe people are better off renting in many cases. Ironically, that was the case several years ago, but that is more often NOT the case now.
For example, there are homes in Eastern Contra Costa County that cost over $600,000 in 2006. Those homes have always rented in the $1,750 to $2,000 range. A person buying that home in 2006 had a total payment (PITI) of at least $4,000 per month with a 10% down payment.
Those same homes now sell for as little as $200,000, and they still rent for about $1,750 to $2,000 per month. BUT, now a person can purchase that $200,000 home with FHA financing and only a 3.5% down payment, and the total PITI can be as low as $1,500 per month. After tax benefits are taken into account, home ownership seems like a far better option that renting.
In our current environment with very low rates and very low prices, buying beats renting in almost all cases.
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