In 2008, The Case-Shiller home price index reported the largest price drop in its history due to a combination of foreclosures, subprime mortgages, housing speculation, CDOs and a dozen other factors. Whether you were a home owner then, since then or you’re still renting, the diminishing housing prices have affected you in some way.
The population is continuously increasing and people still need homes, regardless of what the prices are doing. It’s become more important than ever to look at all of the factors contributing to the cost of a home and what that home may be worth in the future. Today’s infographic will help answer the question, should you buy a house in 2012 or should you continue to rent?
My favorite part of the infographic is the second section, which discusses the price to rent ratio. This is an extremely useful calculation that you can benefit from in any housing environment. Personally, I use this ratio when deciding on whether or not to purchase a property that I plan on renting out. If the price of the house is too high relative to the monthly rent you could collect, it doesn’t make sense to buy the property. The same scenario exists if you are buying with the intention of living in the home – rent until it is financially wise to buy.
The infographic concludes that 2012 is a great time to buy a home. Of course that depends on the area in which you live. Some cities and states have seen price stabilization and even slight increases while others are still decreasing. Another positive factor to consider is the incredibly low borrowing rates. The infographic states that interest rates reached an all time low in 2011, but that low was actually broken today, July 5th. Since the 30-year mortgage has existed, it has never been this minuscule - 3.62%. In my opinion, we will never see prices this low combined with an opportunity to borrow at unbelievable rates.
READERS: Is anyone thinking about buying vs. renting this year or in the near future? What are you thoughts so far and why?