Temecula Valley Home Prices vs Rent Rates - Homeownership is Possible!
Check out this article. It feels a bit disheartening if you are a renter. Fortunately home ownership in the Temecula Valley can be more economical than renting. Call us today and let us know what you are paying for rent. A mortgage may be a much better solution for you! We are helping many renters lower their cost of living buy buying a home! Don't forget to ask about down payment assistance and closing costs credit programs! Buyers have many options to help them with the buying process.
WASHINGTON, March 16, 2015 /PRNewswire/ -- The gap between rental costs and household income is widening to unsustainable levels in many parts of the country, and the situation could worsen unless new home construction meaningfully rises, according to new research by the National Association of Realtors®.
NAR reviewed data on income growth, housing costs and changes in the share of renter and owner-occupied households over the past five years in metropolitan statistical areas1 across the U.S. The findings reveal that renters are being squeezed in many metro areas throughout the country due to the disproportionate growth in rental costs to incomes. New York, Seattle and San Jose, Calif. are among the cities where combined rent growth is far exceeding wages.
Lawrence Yun, NAR chief economist, says the disparity between rent and income growth has widened to unhealthy levels and is making it harder for renters to become homeowners. "In the past five years, a typical rent rose 15 percent while the income of renters grew by only 11 percent," he said. "The gap has worsened in many areas as rents continue to climb2and the accelerated pace of hiring has yet to give workers a meaningful bump in pay."
According to Yun, the share of renter households has been increasing and homeownership is falling. Those financially able to buy a home in recent years were insulated from rising housing costs since most take out 30-year fixed-rate mortgages with established monthly payments. Furthermore, a typical homeowners' net worth climbs because of upticks in home values and declining mortgage balances. The result has been an unequal distribution of wealth as renters continue to feel the pinch of increasing housing costs every year.
"Meanwhile, current renters seeking relief and looking to buy are facing the same dilemma: home prices3 are rising much faster than their incomes," adds Yun. "With rents taking up a larger chunk of household incomes, it's difficult for first-time buyers – especially in high-cost areas – to save for an adequate downpayment."
NAR's research analyzed changes in the share of renters and homeowners, mortgage payments, median home prices, median household income for renters and the rental costs in 70 metro areas.
The top markets where renters have seen the highest increase in rents since 2009 are New York (50.7 percent), Seattle (32.38 percent), San Jose, Calif., (25.6 percent), Denver (24.14 percent) and St. Louis (22.26 percent).
Looking ahead, Yun says a way to relieve housing costs is to increase the supply of new home construction – particularly to entry-level buyers. Builders have been hesitant since the recession to add supply because of rising construction costs, limited access to credit from local lenders and concerns about the re-emergence of younger buyers. Yun estimates housing starts need to rise to 1.5 million, which is the historical average. Housing starts have averaged about 766,000 per year over the past seven years4.
"Many of the metro areas that have experienced the highest rent increases are popular to millennials because of their employment opportunities," adds Yun. "With a stronger economy and labor market, it's critical to increase housing starts for entry-level buyers or else many will face affordability issues if their incomes aren't compensating for the gains in home prices."
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/List4.txt.
Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.
NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.
Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.
2According to the U.S. Bureau of Labor Statistics, actual market rents paid by individuals who do not own the home they live in rose by 3.4 percent in January from January 2014 – the 10th consecutive month of growth above 3 percent.
3The median existing-home price for all housing types in January was $199,600, which is 6.2 percent above January 2014.
4According to U.S. Census Bureau data from 2008-2014.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the "News, Blogs and Videos" tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab.
SOURCE National Association of Realtors