Will the trend of rising rent increase the number of sales of homes in the US?March 7th, 2022 by Administrator
While prices of homes for sales are rising, the rental prices of homes are increasing at even a faster rate. As a result, Americans living in a rented place are ending up spending a bigger share of their monthly income on house rent. This has made the situation more complicated as they are already grappling with the rising prices of gasoline, groceries, and other necessities.
According to Zillow, in California, households with a median rent of $1,571 in August 2021 had to set 34 percent of their income aside to pay the rent.
A house is considered affordable when its rent is less than 30 percent of the tenant’s monthly income. Households who cross that threshold are more likely to have a tough time covering other costs, such as clothing, food, transportation, and utilities.
During the pandemic, it was observed that house rents decreased considerably in various states across the US. However, as more people are returning back to the cities where they work, the rent prices are going up quickly. In some metropolitan areas such as California and Florida, the annual increase in rent is growing even faster.
For now, the effect of growing rent rates on the number of home sales in the US is yet to be revealed by the end of the year.
As increasing house rent is making life more difficult, many people might be tempted to think about having their own home. If you are one of them, you may feel that it will be impossible for you to buy a home at first. However, if you plan well and create a proper strategy, you can purchase a new home while you rent.
Here are a few tips for you on how to finance your home while living on rent:
Explore Affordable Residential Properties in Your Area
First of all, you need to have an idea of how much an affordable home in your area of choice will cost you. Hire a local real estate broker and explore low-price residential properties in your area. Since they frequently deal with home sales, they will make your process of finding an affordable home easier.
Pick an Affordable Home Loan and Check If You Qualify for Any Discount or Special Scheme
In the United States, there are home loan programs at the state and federal levels for low-income people. With these programs, you can obtain a mortgage loan without having to put down a large amount of down payment. In case you don’t qualify for any home loan program, you can consult a mortgage broker to find a home loan with low-interest rates.
Opt for a Loan Lender Who Can Offer You EMI Holidays
EMI Holidays are the fixed number of months for which a lender allows you to not pay any EMIs. This break can help you arrange funds for repayment. This is especially profitable when you are paying rent and cueing to pay the home loan EMIs.
To raise money, you can also sublet a portion of your current house. If you have ancestral income in another city or hometown, you can consider putting it on rent and increasing your income and savings.
So, if buying a home is on your mind, consult with a real estate broker and see whether you can find a home on the market within your budget.