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In the last couple of years, renting a home or apartment seemed a much safer, more cost effective option for housing. In cases where homeowners are forced to leave their homes due to foreclosure or short sale, renting is often the only option. Young couples choose rentals in order to save for their first home. Those relocating to an unfamiliar area often prefer to rent before making a big commitment to buy. This increased popularity of renting has drastically reduced the number of properties available.
The effects of the reduction of rentals has become apparent in relocation as employees are finding more difficulty securing temporary housing and long term rentals. And, the lack of supply is driving up rental prices. Trulia's new Rent vs. Buy Study (March 21, 2012) indicates that after years of home price declines and tightening rental markets, homeownership is now more affordable in all but two (Honolulu and San Francisco) of the 100 largest metros.
In a recent Wall Street Journal article "As Home Rents Head Higher, Owning Regains Its Appeal", it was reported that average apartment rents rose 2.7% last year while the national vacancy rate dropped below 5% for the first time since 2001. Anxious tenants are also complaining about rising rents. Nishu Sood, a housing analyst, says that "historically, the cost to rent an apartment has been about 10% lower than the after-tax cost of owning a home. That rental discount began to fall in 2010 and disappeared entirely last year. By the end of 2011, the cost to rent an apartment was about 15% higher than the cost to own a home. Conditions are overwhelming in favor of buying now".
Climbing rents, combined with continued decline in home prices are beginning to push once-reluctant home buyers into taking the plunge. The entry-level market is back. However, lending and appraisal standards are now very stringent and aspiring buyers are having to compete with savvy investors that make up nearly a quarter of all purchases.
Despite the on-going instability of the financial markets, 80% of current homeowners, in a recent Trulia survey, said they plan to buy again while 59% of renters said they aspire to be homeowners. This bodes well for long term housing demand, But before this can happen, prospective buyers must overcome many barriers to homeownership - from saving enough for a down payment to qualifying for a mortgage and fixing a poor credit history.
The American Dream of owning a home is still alive and is making a recovery.
If you need more information contact NRI. Or call us at (800) 598-8887. | 
