Cameron Spellance-Boston.com Correspondent
May 27, 2022 16:11
It’s not like everyone these days in Metro Boston’s highly competitive housing market is leaving with a bargain basement deal.
Limited inventories due to a shortage of housing in the aftermath of the Great Recession mean that there was a national imbalance in demand that far exceeded the available supply.is Further worse The Boston metro lacks land available for development, and the approval process for projects of all kinds can be a tedious battle.
Given the uncertainties facing the economy, experts say that buying can be more stable than renting if the down payment can be put together. But if that uncertainty leads to price chills, it’s probably a good time to rent. New homes and apartments cannot hit the market fast enough.
In short, the rent vs. purchase decision is a very personal call.
“If you’re asking about a purchase and we’re seeing a price increase, you don’t want to buy at the top, so to speak. You want to buy it and gain value growth. The question is whether it will continue. Fundamentals suggest that there is an imbalance between supply and demand. ” Jeff Myers, Research Director of the securities company Koreas. “On the contrary, inflation is high and mortgage rates are high. It will reduce some of the capacity of those who can afford a home. Where are they sitting and where are they standing?”
The question of whether it’s better to rent or buy arises from the flood of factors hanging in the housing market. Rising interest rates mean that borrowing money to buy a house is more expensive. However, inflation, coupled with its constant imbalance between supply and demand, also raises rents.
Last year, rents rose 12% and home prices rose 15.1% across the Boston metro, according to Zillow. Monthly rents in the region average $ 2,762, but mortgage payments for typical homes are currently $ 2,782.
There is a debate that buyers are still trading because there is so much uncertainty in pricing. Lock in now before interest rates rise further. Expected to do — And inflation continues to dominate the country, the idea goes.
Zillow economist Nicole Bachaud said, “If rents continue to rise, interest rates are rising, but for those who have a down payment, the comparison between buying and renting can be tilted.” I am saying. “Today, buying a home with a fixed rate mortgage is against housing inflation by allowing buyers to fix fixed monthly housing costs, isolated from the risk of rising prices, interest rates and rents. Useful as a hedge. “
Of course, if inflation raises the price of everyday items, it will be difficult to save down payments, Basho added.
However, pandemic bargains in the rental field are barely visible in the rear-view mirror. This means that there are no clear benefits to renting.
It’s not that developers aren’t trying to make the shallow pool a little deeper. Since 2013, less than 12,000 apartments are under construction across Boston’s metro, with more than 19,000 in 2019, said director Chris Le Barton. Overview of market analysis of real estate data company CoStar.
According to CoStar, metro Boston market-priced apartment supply inventories have increased by 20% over the past five years, while vacancy rates have fallen from 6% to 4%. The average rent for that span has increased from $ 2,200 per month to $ 2,700.
“This should always be an individual decision, and the mortgage rate affects the cost of owning a home, but it is not the only determinant of whether someone should buy a home, as well as the mortgage rate. Rents can fluctuate daily depending on supply and demand conditions, “Le Barton said of rent and purchase questions.
“Many people hear radio ads that say something to the effect that” rates have never been lower. “Or “Buy Now Before Mortgage Interest Rates Are Even Higher!” Individuals or Families Should Not Allow FOMO [fear of missing out] Almost certainly leads them to rush to decide what their most important monthly and long-term costs are. “
If there’s one good news that buyers can get, no one interviewed about this story expects a big blow to the values of a Boston home.
“Boston’s diverse economy is central to housing and other ways to survive a recession, and has a solid demographic story compared to the country as a whole,” Le Barton said.