Owning a Home Makes a Comeback

To buy or to rent? That is the question facing many in the Chicago real estate market.
With the market moving in a positive direction, albeit slowly, potential home buyers face a predicament. Do they buy and hope that another housing crisis isn’t waiting to erupt, or do they rent and offer themselves more mobility by not being tied down to a property long-term?
Sold SignThe renting market has seen a huge surge in popularity as many people have opted to avoid the hassles and responsibilities of buying a home in favor of renting.
“The rental market has been incredibly hot,” said Ronald Peltier, chief executive of HomeServices of America Inc.
How hot? Hotter than the pavement at North Avenue Beach in mid-July. Yet that has brought about a problem: Rising rents.
According to real estate research firm Reis Inc., average apartment rents increased by 2.7%. The national vacancy rate fell below 5% for the first time since 2001.
Between the price rise in renting, record low interest rates and shockingly low home prices, many people searching for living quarters are deciding to avoid the skyrocketing costs of renting in favor of doing something that has seemed foreign the past few years: Buying a home.
“The entry-level market is back,” said Dottie Herman, president of Prudential Douglas Elliman.
Is it true? Apparently so.
Nishu Sood, a housing analyst with Deutsche Bank. discovered that in 2011, the cost to rent an apartment was 15% higher than owning a home according to a report by the Wall Street Journal.
But it’s not so cut and dry. For instance, in order to buy a home one must pass the strict lending and appraisal standards as well as rub elbows and compete with investors who have been buying up foreclosed home and reselling them at an expansive pace.
Yet the trend is showing that people are getting off the fence and going back to buying homes due to increases in the cost of renting as well as an overall uptick occurring in the housing market.
According to Trulia‘s Winter 2012 Rent vs. Buy Index, buying beats renting in 98 out of 100 major metro areas.
“The equation of renting versus owning is becoming much more favorable for owning,” said Ivy Zelman, Zelman & Associates chief executive.
One more thing Chicagoans should keep in mind when debating between buying or renting is that few landlords will let you paint your apartment Cubbie Blue.