Vinnie Alonzo Birmingham Homes

With the current real estate market conditions, many of my customers sit on the fence of “to rent” or “to buy”….such a dilemma, but both good questions. In this article I will get into why it is better to buy a Birmingham home rather than rent in this market.  If you watch the news or listen to the radio you will hear how hard it is to get a mortgage, how soft the real estate market is, and this is probably not the best time to buy, WRONG! What you have to understand is that much of that news is national and their numbers are based on national statistics. Our market here is more localized and it is the right time to buy versus continuing to rent.  I use this analogy often, “paying rent is like leaving cash in your mailbox each day.”  It is no secret that real estate sales have softened over the last several years, even here in Birmingham, but nothing like other areas of the country such as Florida, Texas, & California, once again, this is the difference in local versus national markets.

When considering buying a home you may think it wiser to wait until the market adjusts or starts its upward turn but it’s a catch twenty- two, especially if you’re selling and buying.  I just had this conversation yesterday with one of my clients.  This seller who will be a buyer in this market gets it, and that’s very rare.  Most people want it on both ends. We discussed selling his home, where the market is, and what he will get.  He sees this as an opportunity to “buy up” with the many opportunities that are out there.  He realizes that if he waits until we see things start to turn he might get more for his home but he will wind up paying more for the home he buys.  

Owning a home is the largest single investment that most people will make in their lifetime and now is the time to cut that rental umbilical cord and jump into this market as a homeowner.  Consider this, “According to the most recent S&P Case Shiller price index, residential real estate home prices have returned to the first quarter of 2003 levels.” That’s huge, add to that these crazy low interest rates, high inventory up and in some cases some very motivated sellers.  In 2003, 30 year mortgage rates stood around 5.9%, today they are 3.75%.  How does that impact the actual COST of owning home?” I saw a similar chart on a fellow blogger’s post and thought this really drives the point home. 

So why rent when these types of savings are available in today’s market? Where else can you invest your money?  Real estate still yields the highest return on investments over money market accounts and the stock market. The pessimistic buyer might say so why shouldn’t I wait? Well understand this, even if home prices go down further, with the interest rates at these record lows, the cost of buying a home has decreased significantly.  Now this isn’t going to last, once the interest rates go up, so will that American Dream of home ownership, so why wait?

Well I can tell you why.  Many of these fence sitters are disregarding homeownership because they see their friends and family end up in short sales or foreclosures.  They view renting as low risk and this assures them that they will never wind up in that same financial nightmare that has attacked their friends and family members.  The problem with renting is this, a homeowner with a 30 year fixed mortgage paying $1,500 a month would still be writing the same check twenty years later.  In 2011 the Consumer Price Index included a .4% increase in monthly rents, the largest increase since 2008, which represents an annualized increase of 4.8%.  Think about it, if you paid rent for 30 years you would be paying over $900,000 and the same $1,500 mortgage payment would be only $540,000 with an end in sight.    Waiting to get a home at a better price or for the rates to go lower could cost you more when you finally buy a home.  So, what are you saving by renting?

If you are thinking about investing in a home in Birmingham Alabama, either buying or selling or both, please don’t hesitate to call @ 205-453-5345.  Remember it’s not the sign in the yard but the name on the sign.  Vinnie Alonzo and RE/Max Advantage South “Two Names You Can Count On” 

You have many choices in Real Estate but only one right one!