Long Awaited Answer to the Buy vs Rent Dilemma
According to MSNBC.com, buying an apartment or a home may soon be a better deal than renting an apartment. The national monthly median for rent has been steadily climbing in the last three decades, according to data provided by the U.S. Census Bureau and the Thomson Datastream. During that same period, the national median interest and principal mortgage payment has been fluctuating and economists are predicting that the two will finally converge in 2012, placing the cost of a monthly mortgage on the same level as renting.
The price of homes in the U.S. have dropped as much as 33% in the recent years and mortgage interest rates are at a record low. Assuming that the median rent continues to rise by 3% each year and home prices stay flat in 2012 and 2013 and begin rising in 2014 at 3%, buying a house could very well be a more profitable choice than renting over a seven year period. That in of itself however, have yet to encourage the market of deterred buyers rushing back to purchase or upgrade their homes. While the market is ripe for buying, the decision to do so is still dependent on a number of extraneous factors such as personal finances, preferences, career, family and level of security. In addition, the cynicism from the last couple of years could still be felt as many lenders are now stricter than ever and often requiring up to 20 percent for down payment from potential buyers.
While the Manhattan real estate market hardly ever mirrors that of the nation as a whole, there are lessons to be learned here. As the Elegran Edge blog have covered previously, the number of Manhattan residential constructions were up in 2011 and there is no shortage of new developments in 2012 either. Mid-priced and high-end apartments in Manhattan continue to be in great demands as buyers who can afford to purchase in this climate are seeking larger and more lavish options. Subsequently, many developers and investors alike are banking their money on fewer but larger apartments rather than a handful of modest units. Like any metropolitan real estate market, the offerings are often driven by the demands and if the benefits of buying continue to increase, we can expect to see even more new constructions like those happening right now on the Far West Side or near the Highline.
