Friday, February 27 2009
Very often our local real estate market does not follow the national trend, and we all benefit from that. In this case, I’m glad to see that our local market does follow the national trend, and that is in renters turning to home buyers. We hear from many mortgage lenders that the rate of refinancing mortgages has been declining and that there has been a steady increase in rate of purchase of new homes. Evansville in this case is following the national trend.
Rent-mortgage gap attracts new buyers
(CNN) - The gap between the cost of renting an apartment and the average monthly mortgage in the country's 50 largest housing markets is shrinking - good news for those looking to buy a home.
"I think it is positive that affordability is being restored to the housing market," said Celia Chen of moodyseconomy.com. "One of the reasons we had this housing crisis is because prices became so elevated that home buyers, the market could not support the values of homes."
And the subsequent housing bust has home values edging back down to levels closer to the historical average - and narrowing the gap between the cost of a mortgage and monthly rent. That's according to a study by real estate consultants Green Street Advisors that was reported in the Wall Street Journal.
"Even though it's painful for people who own homes purchased in the last couple of years, it does help to restore some balance to the housing market," Chen said.
Lower prices and interest rates are encouraging renters to jump in. But that doesn't necessarily mean the apartment business will soon be struggling.
"There are also of course right now many homeowners being foreclosed upon and the alternative for them is to rent an apartment," said Chen. "So this is all positive for the apartment market."