The rental market is tight and rents are rising. But, so are house prices, especially in markets with strong job growth. Many renters decide to buy their first houses when the cost of owning is equal to or less than the cost of renting. That’s how the rental market in your area directly affects demand for homebuying. As you market your USRealty.com-listed house to local househunters, it’s important to understand how they are calculating the rent vs. buy equation.
Here are three ways to understand how renters are sizing up their buying opportunities.
- Renters Want to Buy According to the 2016 “State of the Nation’s Housing” report just released by the Joint Center for Housing Stu
dies at Harvard University, 67% of renting heads-of-households believe that “homeownership is an excellent investment.” Even if lots of shiny new rental complexes are opening in your area, chances are still good that many of those renters aspire to buy. They’re waiting for the right house at the right time.
- Market to The Rent vs. Buy Math If renters want to buy, what’s holding them back? The lack of a down payment, for one thing: it takes a while to save up even a 10% down payment, especially for young renters carrying student debt. To see if your house is an affordable option, use this rent vs. buy calculator offered by the New York Times to see how the likely monthly cost of owning your house compares to average rents in your area. If you find, for example, that the typical two-bedroom apartment in your area rents for about $1,500 a month, and a buyer putting 20% down would probably have a $1700 monthly housing bill for your house (including mortgage, taxes, HOA fees, and some utilities), you have discovered that your house is in the sweet spot for renters.It might be worthwhile to see how you can reach those renters –maybe by posting on social media sites popular with residents of rental neighborhoods, or by including keywords important to those residents in your home listing.
- Renters’ Runway Renters might want to buy, and they might be interested in your house, but other factors could prevent them from making an offer. Many first-time buyers are building credit histories so that they can qualify for the best mortgage rates. Others are concerned about the expenses of moving and closing costs. If your house is a good option for local renters, it’s helpful to understand some of their related concerns so you can negotiate accordingly – perhaps, for instance, offering to leave outdoor furniture to offset one expense of enjoying your yard, or offering to vacate the house midweek when moving crews are cheaper.