Owning Is More Affordable than Renting in the Majority of the Country
Owning Is More Affordable than Renting in the Majority of the Country If you were thinking about buying a home this year, but already pressed pause on your plans due to rising home prices and increasing mortgage rates, there’s something you should consider. According to the latest report from ATTOM Data, owning a home is more affordable than renting in the majority of the country. The 2022 Rental Affordability Report says: “. . . Owning a median-priced home is more affordable than the average rent on a three-bedroom property in 666, or 58 percent, of the 1,154 U.S. counties analyzed for the report. That means major home ownership expenses consume a smaller portion of average local wages than renting.” Other experts in the industry offer additional perspectives on renting today. In the latest Single-Family Rent Index from CoreLogic, single-family rent saw the fastest year-over-year growth in over 16 years when comparing data for November each year (see graph below): Molly Boesel, Principal Economist at CoreLogic, stresses the importance of what the data shows: “Single-family rent growth hit its sixth consecutive record high. . . . Annual rent growth . . . was more than three times that of a year earlier. Rent growth should continue to be robust in the near term, especially as the labor market continues to improve.” What Does This Mean for You? While it’s true home prices and mortgage rates are rising, so are monthly rents. As a prospective buyer, rising rates and prices shouldn’t be enough to keep you on the sideline, though. As the chart above shows, rents are skyrocketing. The big difference is, when you rent, that rising cost benefits your landlord’s investment strategy, but it doesn’t deliver any sort of return for you. In contrast, when you buy a home, your monthly mortgage payment serves as a form of forced savings. Over time, as you pay down your loan and as home values rise, you’re building equity (and by extension, your own net worth). Not to mention, you’ll lock in your mortgage payment for the duration of your loan (typically 15 to 30 years) and give yourself a stable and reliable monthly payment. When asking yourself if you should keep renting or if it’s time to buy, think about what Todd Teta, Chief Product Officer at ATTOM Data, says: “. . . Home ownership still remains the more affordable option for average workers in a majority of the country because it still takes up a smaller portion of their pay.” If buying takes up a smaller portion of your pay and has benefits renting can’t provide, the question really becomes: is renting really worth it? Bottom Line If you’re weighing your options between renting and buying, it’s important to look at the full picture. While buying a home can feel like a daunting process, having a trusted advisor on your side is key. Let’s connect to explore your options so you can learn more about the benefits of homeownership today.
Costs of Selling
one of the most frequently asked questions we get asked here at the jen holden group – how much will it cost to sell my home? here's the answer: on average, selling your home will cost you around 10% of your home’s sale price. In addition to any market-ready expenses, here are 3 C’s to keep in mind if you're thinking about selling: • concessions (1-2%): although less frequent recently, sometimes sellers agree to pay a portion of the closing costs in order to seal a sweet deal. It's a good idea to set aside 1-2% of your home’s sale price just in case this comes up. • commissions (5-6%): on average, sellers pay 5–6% of the sale price as commission fees. For a $200,000 home, you’d pay $10,000-12,000, divided between your listing and buyer’s agent. • capital gains (varies): if you’ve lived in your home for less than a year, The capital gains tax is a tax on the profit you make from selling an asset, including real estate. Make less than $250,000 profit? You're in the clear. wanna talk more about selling your home in 2022? Send me a text or email at 443.803.7620/jen@thejenholdengroup.com, and I’ll be in touch!
A Quick and Easy Way to Save Money: the Homestead Tax Credit
Property taxes are not generally an exciting topic, I’ll give you that. However, what if you knew you could do something today in just a few minutes that Future You would really appreciate and would save you money (and anguish)? Read on for the details on something you can do as a Maryland homeowner: apply for the Homestead Tax Credit. What is the homestead tax credit? (https://dat.maryland.gov/realproperty/pages/maryland-homestead-tax-credit.aspx) It limits the increase in taxable assessments each year to a fixed percentage. Every county and municipality in Maryland is required to limit taxable assessment increases to 10% or less each year. So if your assessment went up by more than 10%, you would not pay tax on the market value increase which is above the limit. For example, if your $100,000 assessment rose to $120,000, that’s a 20% hike. The tax credit would prevent any increase above 10% or $110,000 and would apply to the taxes due on the amount above that or $10,000 in this example. At a tax rate of $1.04 per $100 of assessed value, the tax credit would be $104. PLEASE, please, please note. A tax assessment is the state’s estimate of what your house is worth for taxation purposes. It has absolutely no bearing on market value. I can estimate your home value for resale purposes at any time, or help with comparables for a refinance, but please don’t confuse the tax assessed value with your home’s actual market value. (Most home buyers would prefer the former to be as low as possible and the latter as high as possible!) After your deed goes on record, you should get a notice from the State of Maryland that you’re eligible to apply. This credit applies for your primary residence only, and you must have lived in it for at least 6 months of the year, including July 1 of the year for which the credit is applied. You can check to see if your deed is on record in the Maryland Land Records (https://mdlandrec.net/main/), or just ask your title company to check for you. How do you know if you already applied? Two ways. One, check your property tax reassessment notice. It will say “Homestead Application Approval” - YES or NO. Two, check your property on the MD State Department of Assessments and Taxation website, SDAT (https://sdat.dat.maryland.gov/RealProperty/Pages/default.aspx). After you select your county and search by address, scroll down to the bottom and look in the “Homestead Application Information” section. How do you apply, if you need to? Download a PDF application form and mail it in (link: https://dat.maryland.gov/SDAT%20Forms/Homestead_application.pdf), even FAX it in to 410-225-9344 if that’s how you roll, or apply online (link: https://sdathtc.dat.maryland.gov/). While it can take up to a year to process, once it’s approved, it lasts as long as you own the property. You will not get any kind of notification - you’ll have to look on SDAT. Go apply today! Next time your assessment rises, you’ll be happy you did.
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