Traditionally, November and December are slower months for Real Estate.  Add the recent elections, which have most people watching their wallets (and their stocks), to this annual shift and we may see a quiet couple of months.  At SFhotlist, we like to buck trends!  We consider this time of year a hot time to buy and sell.  Buyers:  inventory may be lower but so is interest – stay in the game.  Sellers: buyers won’t really stop looking at this time of year – don’t shy away from putting your home on the market.

Another incentive to buy and/or sell comes from Trulia’s “Summer 2012 Rent vs. Buy Report” released in September.  Although San Francisco is ranked #2 in the Top 5 Metro areas where homeownership affordability is lowest, the research shows that owning a home is still less expensive than renting one in San Francisco. According to Trulia’s numbers for San Francisco, the monthly cost of homeownership is $2,327, the monthly cost of renting is $3,226.  The difference between the two is -$899 or -28%.  Some background information, as noted in Trulia’s Press Release,”Cost of homeownership assumes that the home is sold after 7 years and includes closing costs, maintenance, insurance, property taxes and other costs. Cost of renting includes security deposit and renters insurance. Monthly costs are based on net present value of costs averaged over 7 years, and based on the average across all properties listed in the metro area, including those for sale and those for rent, in summer 2012.”  The following chart is from Trulia’s report:

Trulia Summer 2012 Rent vs. Buy Report Chart

Will this shift in the rent vs buy debate in San Francisco translate into more home renters becoming home buyers? According to Danielle Lazier, founder of SFhotlist, the answer is “yes”.  She has seen it in her own business. “This year, I have definitely seen an increase in prospective San Francisco home buyers telling me their main motivation for buying a home is the fact that their rent now exceeds their likely mortgage payment”, Danielle tells us.  She adds, “In my 10+ years in San Francisco Real Estate, this is the first time I’ve heard this particular reason from such a large number of clients.”  She makes a good point to which we’ll add that near record-low mortgage rates are making homebuying even more attractive.

We know there is more to consider than simply the cost of rent vs the cost of a mortgage when buying a home. As Trulia explains: “If buying a home is cheaper than renting in every major metro and makes financial sense in most situations, then why aren’t more people buying? The reason is because many people can’t take advantage of today’s affordability,” said Jed Kolko, Trulia’s Chief Economist. “It takes years to save enough for a down payment, and it takes a high credit score to even qualify for a mortgage, let alone to get the best rate. In the recession, many people found it harder to save – and harder to keep up their credit scores.”

Even if everything is in alignment, it’s a big decision to make:  buy or keep renting.  Do we hear a New Year’s Resolution in the making ?

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