First time Vero Beach homebuyers are in a trap they can't seem to get out of, and it's called a "Rent Trap."
Everyone has pretty much come to the conclusion that interest rates won't stay low much longer, and home prices continue to rise. New three percent down programs from Fannie and Freddie sweeten the deal for new buyers. FHA’s mortgage insurance premium cut makes FHA affordable again. Incomes are up.
To top it all off, greedy landlords everywhere seem to be practically pushing their tenants out the door, with rents rising every month. Rent vs buy comparisons show renters how much they are losing by staying put. According to Reis, Inc., the average US monthly rent has climbed 14 percent in the past five years—double the rate of home price appreciation. Rents rose 3.5% last year according to Zillow, which forecasts another 3.5% hike this year. Rents are forecasted to keep rising in 2016, though record numbers of new apartment openings are expected to slow down increases to about 2 percent, according to Zillow.
Renters Not Rushing to Become Vero Beach Homebuyers
In what could be considered a reverse trend, rising rents do not appear to be playing a significant role in motivating renters to become Vero Beach homebuyers. This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. Rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing.
Instead of acting as an incentive to buy a home, rent hikes are keeping renters captive by siphoning off cash that otherwise might have been saved to make a down payment or pay closing costs. Even to save the 3 percent down required of the new Fannie and Freddie programs, it takes two years or more for the average first-time Vero Beach homebuyer to muster enough for a down payment. Every time rent increases, it’s going to take even longer to save enough to become a homeowner.
In the past, renters making the national median income could expect to pay about 25 percent of their income on a typical apartment. Today, renters should expect to spend roughly 30 percent of their income on the median apartment
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