A commonly repeated statement among real estate and mortgage professionals here in Winter Haven and elsewhere is that — before a true housing recovery can begin — the cost of financing a home versus renting one must return to historical levels.
If this is true, then hold on to your hats, folks – as we may be in for rising home prices in 2009.
Falling home prices – working in tandem with falling mortgage rates, have forced the relative, after-tax cost of owning a home down to 125% of the cost of renting a home. This figure represents the exact 18-year historical average, and the difference between renting and owning Winter Haven, Florida real estate hasn’t been this small since 2001.
But Wait… all may not be as it seems.
As reported by the Wall Street Journal, the 125% mark may be a little off. For example, the data doesn’t account for ongoing home maintenance costs, and it doesn’t take real estate taxes and insurance costs into account, either.
That said, I believe we’re still in for a rise in home purchasing activity, as the combination of a relatively low cost of ownership and the $8,000 tax credit for first-time home buyers will be enough to nudge long-time Winter Haven renters into homeowner status.
This, too, is thought to be a key element of the housing recovery.
Look for Winter Haven home prices to edge lower through 2009. Provided mortgage rates stay low, the cost gap between owning and renting will shrink even more.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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