The economy is strong and jobs are plentiful in Portland. In fact, the current unemployment rate here as of April 2017 was 3.4 percent, a full 1.3 percentage points lower than the national average. So why be a renter? Not only is it cheaper to buy than rent in the nation’s 100 largest metros, the long-term benefits of homeownership are undeniable and innumerable.
According to Trulia’s May Rent vs. Buy report, it was 22% cheaper to rent than buy than to rent in Portland, OR. So, whether it is owning a chic home in Portland or buying into the Vancouver real estate market, now is the time to get started.
Prices are increasing along with interest rates. Portland homes are gaining value as the buying season heats up, jumping nine percent between March 2017 and May 2017, according to Trulia. The median sales price of homes rose from around $371,000 to $405,000 in that period. Last week interest rates rose by 0.25 percentage points. The Federal Reserve plans at least one or two more hikes before the end of the year if the economy stays healthy.
Considering this new information, it is still 11% cheaper to buy in Portland.
Long-Term Benefits of Homeownership
- Gain value – A home’s value increases overtime and Portland home value’s upward trend outpaces much of the country. Between July 2012 and May 2017, the median sale price of homes increased 52 percent. More than 90 percent of Portland homes are valued at more than their pre-recession peak, according to Trulia.
- Build equity – “When you pay a mortgage, every dollar stays as value in your property,” says Ralph McLaughlin, Trulia’s Chief Economist. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”
- Get tax benefits – You can deduct your mortgage interest payments, property taxes, and energy efficiency upgrades. This is a big benefit early in your loan. The majority of your initial mortgage payments are interest. The interest payments decrease as you increase the amount of equity that you have in your home. So if you are early in your loan, your deduction will be significant.
- Build a nest egg – “Owning a home is one of the most common ways households build long-term wealth,” says McLaughlin. “That said, potential homeowners should go into homeownership with the expectation that wealth generation will be more akin to a marathon than a sprint.”
- Get peace of mind – Renters nationwide fear the end of their leases due to the forced choice between the rent increase and moving to a cheaper place. By choosing a fixed mortgage, the monthly payments will stay the same. This allows for budgeting further into the future.
- Gain freedom – living in a rental limits one’s personal style. White walls, neutral color carpet, and basic kitchen appliances are standard fair in most rentals. Owning a property frees one’s creative style with no checking the lease or getting permission from the property owner. Note: living in a community with an HOA may be limiting as well. For example, anything visible from the outside of your property may have restrictions including the type of window treatments you choose.
“Homeownership is a sound investment if a household can meet two basic requirements,” says McLaughlin. “One, that they’ll stay put in the home for at least 5 years, and two, that they’re not paying an unreasonable amount of their income towards their housing payment.”
To get started, determine how much home you can afford with a home affordability calculator or mortgage payment calculator and reach out to a qualified mortgage banker to get pre-qualified. Doing so will make the house hunting and escrow process much smoother.
Business Development • Trulia
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