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Rental Markets create a squeeze gate for home purchases
Two recent articles analyze the Rental Market and the affordability of renting vs. buying. The first, a housingwire article, cites a Freddie Mac survey that 82% of renters now view renting as more affordable than homeownership. Compare this article to a recent Rent Report by Zumper; it states that some markets such as the most expensive, San Francisco, CA, command a two-bedroom rental rate of $4720 a month! When rental markets are strong, there is typically a lack of affordable housing or financial ability to obtain a mortgage. Boise, Idaho, for example, suffers from a lack of affordable housing because the average rental rate for a two-bedroom there is $1100, but that payment amount only yields a $185,000 mortgage, and unfortunately, there aren't many choices in that price range.
Here are a few solutions for would-be home owners that are getting the squeeze from a strong rental market:
1. Move 20 miles out. What you trade for time in commute and gasoline you gain in home equity and quality of life. If your car gets 20 MPG, you'll spend $6 x 20 working days = $120 a month. Using our Boise example, if you buy a home for $185,000 that is a little further ... more
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