Renters in no hurry to buy

Survey shows downpayment, job circumstances biggest tipping factors

By Inman News, Wednesday, August 18, 2010.

Inman News

Most renters who plan to become homeowners say it will be at least two years before they make the leap, and more than one out of four renters say they’ll never buy a home, according to an online survey by Harris Interactive.

The “American Dream” survey, conducted in July on behalf of property search site Trulia.com, included 1,345 homeowners and 663 renters.

Among those surveyed, 72 percent considered homeownership to be “part of their personal American dream,” down from 77 percent six months ago.

Among renters who plan to become homeowners, 68 percent said they aren’t planning to make their move in the next two years. But 69 percent of that group said they could be prompted to take action in the next 12 months if their circumstances changed.

Among that group, 47 percent said they could be spurred into action if they were able to save enough for a downpayment. Another 28 percent said a new job would be a tipping factor, while 27 percent said that if mortgage rates stay low or get lower they could be persuaded to take action.

About one in four said they needed to be persuaded that it made more financial sense to buy than rent (24 percent), and 23 percent said a job promotion or raise could get them off the fence. Only 9 percent said they are looking for signs that their local real estate market has stabilized.

So you’re on the fence about buying now or waiting. I hear ya. In fact I hear people like you talk to me all of the time. “Should I buy or should I wait?”, they say. Here’s the answer. It depends on your circumstances. If you have a steady job that you don’t foresee losing anytime soon, that’s a plus. If you have a little bit of money saved up. That’s a plus. If you’ve paid all of your bills on time and have good (doesn’t have to be great) credit, that’s a plus. If you said yes to these three, so far I would say yes, you should look into buying right now. But wait, there’s more (I feel like I’m watching an infomercial when I write that).

Interest rates are at or near ALL-TIME lows, hovering around 4.5%. Those are all-time lows. That means that they are not normal. Back in the early 1980′s, interest rates were as high as 15%-18%-21%!!! Now they are at 4.5%! Here’s the other thing: in the 1980′s when interest rates were so high, the real estate market was bad (especially in Seattle since Boeing was one of the main employers, and they laid off a ton of employees – spurring a bad local economy). The real estate market is comparable to that right now. There were/are a lot of foreclosures on the market, and it was/is a buyers market. The weird thing about today’s market compared to the early 1980′s, or anyother time in history for that matter, is that we’ve never had low interest rates AND a buyers market at the same time. This is not normal. So, let’s do the math now: you have a steady job, you have decent credit, and you have a little bit of money saved up (you only need 3.5% as a downpayment on an FHA 30 year fixed loan – that’s only $10,500 down on a $300,000 house!). Add in low interest rates, the low downpayment, and a buyers market and you’ve got yourself a good time to buy a deal!

As a bonus, you can find that deal with my help – I am a deal finder! That’s all I do! I find places that are under-priced and are a good value. With my help, you don’t have to be a renter anymore.