Your search results

Property Management – Calabasas

CALABASAS PROPERTY MANAGEMENT

The Challenges Of Home Ownership Make Renting Very Attractive

Those of us who bought our homes towards the top of the last housing bubble (2003-2007) are relieved to hear that the average price for houses is climbing steadily in most regions of the U.S. Yet for many the cost of buying a house is still making it difficult or impossible to become homeowners. Even though interest rates are still at all-time lows, it’s still tough to qualify for a mortgage. Income verification, credit scores and the fact that loan processors are swamped with new applications from those attempting to refinance existing mortgages at lower rates are all large impasses.

Let’s look at the cost of financing a new or existing house to begin with. According to my research the average closing costs on originating a new loan is between 2% and 3%. On a $250,000 mortgage that can equate to total costs (including appraisal, title insurance, escrow fees and in some cases mortgage insurance) that can easily equal $7,500 or more. Think of that reality if you’re trying to buy a $320,000 house. If it isn’t a new, builder-financed or subsidized house the buyer will need to come up with $64,000 for the 20% of the appraised value down payment. Then the buyer has to go through the qualification process for a $256,000 mortgage.

After a long and arduous process of proving your past two years of income, your credit-worthiness and your net worth (all assets you claim to own minus debts and liabilities) you hope to be told you qualified for the mortgage. Like a “good news, bad news joke” your then told that total closing costs will be $7,680 (3% of $256,000). That means just to get into the house you need $71,680 (down payment plus closing costs). Then you find out you’ll need to buy homeowner’s insurance and if you bought in a community that has a Home Owner’s Association (HOA) you’ll have monthly or annual HOA fees that you’re obligated to pay.

In the past 4 weeks mortgage rents have been climbing as the benchmark 10-year Treasury bond has been under market selling pressure moving interest rates higher. The average interest rate on a fixed, 30-year conventional mortgage is nearing 4%. As one analyst reported on May 30, 2013, “Even at 4%, mortgage rates are low by historical standards. But when combined with rapidly rising prices, this can quickly change the affordability equation for buyers. For a $300,000 home with a 20% down payment, for instance, the monthly cost of a mortgage at 3.5% would be $1,078. If that home appreciated by 10% and mortgage rates rose to 4%, the monthly payment would rise to $1,260, or a difference of $182 per month. That might not be a deal breaker, but it certainly makes purchasing seem like less of a bargain and it could tilt a potential buyer who’s on the fence about renting.”

The tide is turning back towards the advantages of being a renter. This is especially true in many regions of the country where home prices have soared in the past 3 years. Have I mentioned that homeowners have to also pay property taxes? Renters don’t have that annual financial headache to deal with. For the record, I’m not saying that it isn’t a good time to try to find a house you can afford to buy. What I’m saying, and this is a special “FYI” for property managers, it should be getting easier to fill vacancies in the months ahead.

Even after paying a sizeable security deposit the upfront cost of renting a decent house, duplex or apartment is a lot more affordable then even buying a starter home. Property Managers might consider running ads that offer a cost comparison between buying and renting one of the rentals you have open. The federal government’s HUD website has an excellent page “Common Questions from First Time Homebuyers” that is a must-read. It not only helps those who are trying to decide whether to rent or buy. It will also help Property Managers provide accurate, objective information when you’re trying to assist potential residents who are trying to make up their minds.

by Marc Courtenay

Since 1946 the Carnahan name has had a reputation for honest and ethical Real Estate Property Management services in the San Fernando Valley, Santa Clarita Valley, Burbank/Glendale, Los Angeles, Westside and Conejo Valley areas.

The reason for our success is helping owners like you when they need it. Below is a partial list of property management services we provide to help you protect your real estate investment.