What you need to know before renting a home in 2017

By
Real Estate Agent with RE/MAX of Valencia (Hall of Fame) 30 year Valencia Resident BRE# 01215778

Are you thinking of signing a lease rather than buying a home?

Stop!

Read this before signing on the dotted line!

Times have changed and the fear of a 40% market crash have all but disappeared.  Fear of loss is outweighed by personal and financial benefits.

Why did the real estate market crash in 2006?

  • It was political and both parties were to blame.  Democrats felt as though home ownership was the right of all Americans and Republicans went along with the idea.
  • The government forced banks and lending institutions to lend out money.
  • Creative financing was created.
  • First came Interest Only Loans.
  • Then came Negative Amortized Financing.
  • Then came "liar loan" with no verification of employment or income.
  • Then came stated income loans.

Financing for these creative financed loans was base upon adjustable interest rates with a starting interest rates low enough to make the payment affordable.

Home prices in many areas went up for three years in a row at rates of 28% 22% & 18%.  These prices were too high to sustain so the market began to fall.  Investors played the roll of the extra person in the game of Musical Chairs.  They abandoned ship quickly.  Once they began selling they flooded the market.  This added inventory had priced dropping like a lead balloon.

Adjustable Interest Rates made home unaffordable for a large number of home owners that were left clueless.  Honorable people were now losing their homes and walking away at an alarming rate.  Home prices in many areas dropped 45% or more.  The hardest hit homes were those with a Mello Roos Bond.  Communities with previous home prices of $750,000 sold at the bottom of the market for $280,000 due to an added monthly payment for Mello Roos and HOA fees of $680 per month.

 

Short Sales Replaced Foreclosures and the Bottom was formed

Home Ownership in 2017 is different, same and once again the American Dream.  Unfortunately the Millennial Generation and those previously devastated by the collapse of 2006 are losing out on the new real estate boom.

 

The market is now safer in many ways:

  • Lenders are scrutinized and must pass stress tests regularly.
  • Buyers need to prove their credit worthiness.
  • Loan to Income Rates are higher than before.
  • Verification of Income is mandatory.
  • Stated Income Loan are rare and the interest rates are high as are costs.
  • Appraisals are being performed by independent non-affiliated companies.
  • Buyers have much larger down payments and more to lose with failure

Home Ownership is beneficial, predictable and the New American Dream.

Price, Equity, Tax Benefits, Better Education, Stability, did I mention Pride?

Your Friends & Realtor,

Tony & Dani Lewis

RE/MAX of Valencia

www.TonyLewis.com tonyglewis@yahoo.com

Call/Text us at 661-510-7975

 

 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Tony and Suzanne Marriott, Associate Brokers 07/20/2017 05:59 AM
  2. Debbie Reynolds 07/20/2017 04:35 PM
Topic:
Real Estate Market Trends
Location:
California Los Angeles County Santa Clarita
Groups:
Realtors®
RE/MAX Active Rain Bloggers
Santa Clarita Resources
Blatant Politics
Tags:
buying
interest rates
market
2006
valencia
investors
financing
democrats
ownership
american dream
crash
political
mello roos
real estate
remax
homes
tony lewis
2017

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Rainmaker
3,198,684
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Tony 

Great information in your What You Need to Know Before Renting home.

Good luck and success.

Lou Ludwig

Jul 20, 2017 08:07 PM #9
Rainmaker
3,198,684
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Tony 

Congratulations on a gold star feature for an outstanding post.

Good luck and success.

Lou Ludwig

Jul 20, 2017 08:08 PM #10
Ambassador
3,333,915
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Thankfully we are in a different place as far as the lending industry is concerned. Buying a home is, for many, the best option and less expensive. But affordability is becoming much more of a challenge (certainly here in CA!), with rising prices, low inventory and salaries that are not keeping pace!

Jeff

Jul 20, 2017 10:38 PM #11
Ambassador
3,576,235
Praful Thakkar
eXp Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Congrats, Tony Lewis - this post is featured for all good reasons! Keep up the hard work.

Jul 20, 2017 10:55 PM #12
Ambassador
3,576,235
Praful Thakkar
eXp Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Tony Lewis - very analytical post - and hope buyers do get it! The crash happened once, for different reasons.

The market is healthier now - and likely to remain the same for some time to come.

Jul 20, 2017 11:06 PM #13
Rainer
100,146
John Bear
RE/MAX - Lake Bluff, IL

Guess you can now die happy!

Jul 20, 2017 11:49 PM #14
Rainmaker
40,781
Steve Bracero
Heisler and Mattson - Shrewsbury, MA
First Time Homebuyer and Investor Specialist

Hi Tony Lewis great post! You made some very good points for future potential buyers 

Jul 21, 2017 04:07 AM #15
Rainmaker
3,175,332
Dorie Dillard
Coldwell Banker United Realtors® ~ 512.346.1799 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Tony Lewis,

Glad to see this post featured! Congratulations! Those were crazy times in the 2006-2008 market. There is still fear among renters  for many reasons, inventory is low, prices are higher and many can't afford what they want and may be moving because of lack of jobs in their area. Home ownership is a responsibility and many don't desire the commitment.

Jul 21, 2017 04:07 AM #16
Rainmaker
566,335
Nick & Trudy Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

We need to see more encouragement for millenials to get in the game and not keep renting wasting money without any benefit. Good post.

Jul 21, 2017 04:50 AM #17
Rainmaker
2,181,602
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

When we add artificial (manipulative) dynamics to anything...woe is on its way

Jul 21, 2017 06:34 AM #18
Rainer
234,154
Anthony Vosilla
Tony's Appraisal Services - Centereach, NY

Two important factors was left out of the collapse situation...A serious lack of rational thinking (ie common sense) and..GREED...

Jul 21, 2017 08:37 PM #19
Rainmaker
281,310
John Wiley
Jones & Co. Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

Good information on renting or not.

There were a lot of Baby Boomers who lost big time in the crash and have not recovered. NAR says by 2020 about 20% of Boomers will turn to renting.

 

Jul 22, 2017 06:09 AM #20
Anonymous
Nancy Lucas

Apartment occupancy is at an all time high, and for good reasons. First, they are usually well located and near public transportation. The rent covers 24-hour emergency service, handy man services, appliance repair and replacement and other services -- in a timely manner. I say apartments over private homes because I have seen too many situations where landlords don't do their jobs well and tenants are powerless. (The lease in Arizona favors the landlord over the tenant.) In one situation, requests to repair a water leak (in a condo) were ignored for several days because the landlord was trying to get the HOA to pay. Meanwhile, black mold developed!

Jul 22, 2017 11:10 AM #21
Rainer
374,562
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Tony,

Good reasons for why folks should buy instead of renting. In our area, some people only get posted for 2 years or so, in which case renting is less of a headache. Unless they plan to stay afterwards or do not mind managing a rental long distance, of course.

Jul 22, 2017 11:11 AM #22
Rainer
197,156
Chris Lima
Atlantic Shores Realty Expertise - Port St Lucie, FL
Local or Global-Allow me to open doors for you.

I work with a lot of millenials and most tell me that they can't afford to buy a house with the features/upgrades that their rentals have.  I will keep trying my best to educate and support.  They do see things differently than my generation, but that's what makes things interesting.

Congrats on the feature, Tony.

Jul 23, 2017 07:31 AM #23
Rainmaker
1,278,291
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

You nailed why the markets collapsed. Too many of the financial calamities in the US have had a political component. 

Jul 23, 2017 09:35 AM #24
Rainer
418,894
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

The following statement was derived from a report titled "The Repeal of the Glass-Steagall Act, Myth and Reality from the Cato Institute by Oonagh McDonald, November 16, 2016, "politicians have been able to divert attention from the ultimate cause of the financial crisis, namely their belief that affordable housing can be provided by encouraging — or even obliging — banks to advance mortgages to homebuyers with low to very low incomes, and requiring government-sponsored enterprises (GSE's) to purchase an ever-increasing proportion of such loans from lenders. If politicians continue to believe that affordable housing can only be provided in that way and act accordingly, no one need look any further for the causes of the next financial crisis.

The rules as you stated were changed by the Democrats and President Clinton, however, you stated that the Republicans were also to blame for going along with the idea. The HOR was controlled by the Republicans with 223 representatives, thus less than 6 RINO's were all that was necessary to go along with the idea. Lumping Republicans as going along is disingenuous IMO.  

At the time, the HOR was controlled by the Republicans with 223 representatives, yet less than 6 RINO's were all that was necessary to go along with the idea. Lumping Republicans as going along is disingenuous IMO.  Would you punish all of your children when only a few were disobedient? 

The key IMO to increasing home ownership for first-time buyers is education about money and how money works and the consequences of making indiscreet financial decisions.

Jul 23, 2017 05:05 PM #25
Rainmaker
281,433
Jay McHugh
SendOutCards-Appreciation Marketing Expert - Boston, MA
YOUR SendOutCard Mentor

Well done...Congrats....great points even though some disagree your points are well documented....

Jul 24, 2017 03:35 AM #26
Ambassador
1,566,018
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Great Post I read this before not sure that I commented Tony Lewis if I did forgive read it again when Carol Williams  Featured it

Jul 24, 2017 11:34 AM #27
Rainmaker
123,626
Stavrula "Sam" Crafa, RNC,GRI, CDPE, PSA
Future Home Realty - Seminole, FL
Providing the integrity and service you deserve.

I agree. The market is much safer now then it was and even though the values are rising, home ownership is the better way to go for most people. And there are plenty of down payment assistance programs to help those that can afford the payment but don't have enough savings for all the costs involved. Buyers need to find agents and lender that are well versed in those programs to help those buyers realize the dream of home ownership. 

Jul 30, 2017 09:13 PM #28
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RE/MAX Valencia, Stevenson Ranch, Santa Clarita
Home values are rising, want to know the value of your home?
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