Home By Any Other Name
Rent or Own — the Eternal Question
It may lack the rhetorical elegance of “To be, or not to be?” but “Rent or own?” is the question that potential first-time Texas homebuyers must ask themselves. And in times of economic uncertainty, that decision is enough to make anyone a housing Hamlet.
When weighing the pros and cons of purchasing a home, Texans should keep a couple of basic principles in mind: supply and demand and debt to income.
Lots of Housing
Texas’ housing supply has flattened a bit as recession-shy builders pull back, notes Stephen Lipkin, a director at Fannie Mae. But the supply of existing homes throughout Texas remains ample, as evidenced by recent statistics reflecting a higher average number of days on the market before Texas homes are sold.
Yet market demand for Texas houses remains quite strong, particularly compared with that in most other states. The state continues to attract large numbers of new residents seeking its job opportunities and lower cost of living. And while other states have seen abrupt swings from sellers’ to buyers’ markets, Texas’ residential real estate market has held relatively steady.
Similarly, supplies of and demand for rental housing have remained largely in balance throughout Texas, although some developments are offering discounts and other incentives to keep apartments occupied. As with home sales, the rental market benefits from a continuing influx of new Texans, including college students, relocated employees and those who simply prefer nights untroubled by worries about paying for a new roof.
Weighing the Costs
Lipkin says potential buyers must look at the total costs of homeownership – principal, interest, taxes, insurance, and reserves for maintenance. Mortgage lending guidelines are often tighter in a tough economy.
In evaluating a borrower, Lipkin says, lenders look at a number of factors, including income, employment and credit history, delinquencies, loan-to-value ratios, liquid reserves, loan type, property type and the amount of debt involved in relationship to one’s income.
So, homeowner or renter? It all depends on one’s finances and preferences, as well as the housing and rental markets in the community you’re looking to call home. As long as you’re living and working in Texas, how can you go wrong? FN