The New York Times recently had a real estate section cover story about how both sales prices and rental rates were out of sight for many areas of NYC. There didn't seem to be a good choice for someone looking to move to make. Here, we see things as being different. Rentals in our region are increasingly scarce. New Haven has the lowest apartment vacancy rate in the country. In addition, we haven't seen the wave of foreclosures that people think may be coming in our state. If or when it does, that will mean that large numbers of people will go from being owners to being renters, for at least the seven years that they will need to wait before they can borrow again. Where are they all going to go?
On the other side of the equation, prices for homes are low. Very low. And so are mortgage rates. That makes it a good time to buy, if you believe that prices are going to rise. In that regard, we got some help from a Trulia article, albeit a backhanded compliment. Greater New Haven was listed among the ten cities where the number of people looking to move out most exceeds the number of people looking to move in. It also predicted that prices would go down a couple of percent by the third quarter of this year. BUT, it went on to say that price increases would average 5.3% per year through 2016, meaning that someone who buys a home and plans to hold onto it for five years, whether living in it or renting it out, will be likely to get quite a bit more for it when he or she goes to sell.
That seems to me to make the rent versus buy decision pretty simple around here. It's the time to buy.