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Rentals

We definitely have a rental market! Whether it is a first time renter or previous homeowner’s faced with short sales or foreclosures. Regardless, it has become competitive in the Chicago area. Although decreasing home prices and low mortgage rates have opened up fantastic opportunities in the housing market, it can be difficult to qualify for a mortgage, thus increasing the number of Americans renting.

The Wall Street Journal noted that once government subsidies for mortgages are gone, moderate and low-income consumers are going to be looking to the rental market for housing solutions. “The nation’s renter households now top a record 37 million, and another 4.4 million households could be added by 2015.”

As the mortgage rates decrease, homeownership becomes more attractive. Yet, we continue to see a very strong, competitive rental market. According to the Consumer Price Index, tracked by the Bureau of Labor and Statistics (BLS), prices for the rent of a primary residence have increased at an average rate of a little more than 3 percent per year for the last ten years. The table below shows monthly, annual, and total rent over ten years assuming a 3 percent annual increase.

By contrast, a home buyer who locks in a thirty-year mortgage will have fixed mortgage payments. Buyers locking in a mortgage rate now have fixed payments at record low rates. (Full Article)

Buying vs. Renting

Is it better to Buy or Rent? Whether renting is better than buying depends on many factors. Listed are several questions to guide you with the rental process, whether you are a Landlord (Lessor) or a Tenant (Lessee)

For Landord (Lessor):

  • Who will tend to the property and pay for routine maintenance?
  • Who pays for major repairs?
  • What are the costs of setting up and managing an escrow account for the portion of rent allotted to the down payment?
  • Will you manage the property yourself, or hire an agent?
  • What if the renters change their minds?
  • Who keeps the money in the escrow account?
  • If the buyers change their minds, what will be required to put the property back on the market?

For Tenants (Lessee):

  • How much of the rent is going to the down payment?
  • How locked in are you if you change your mind?
  • What will it cost you to get out of the deal?
  • How long will it take to accumulate enough of a down payment that you are likely to qualify for a mortgage?
Source: REALTOR® Magazine Online.

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