There is yet another reason for first-time home buyers in Westchester NY to get off the fence. Rising rental rates. There has always been a yin/yang between buying vs renting a home. Before the crash of 2008, Westchester homes have been priced such that the pendulum had swung toward renting. For a while now that the pendulum was in the center making the decision a wash. Buying made sense if buyers were looking to stay put for at least 5 years. Now the pendulum is starting to swing in favor of buying.
Since the market for rental agents is small at best, I generally don’t spend much time looking at rentals – though I do keep an eye on the prices. Over the last few months I was noticing that the rates were edging up, but it wasn’t until I started working with a tenant that I realized the extent of the jump AND the shortage of units.
Easy enough, I thought. I pulled the appropriate listings – my eyes popped a bit as I saw the pricing…definitely higher than just a few months ago. I found six appropriate units and started calling. All but two were already rented and they had only been on the market a week or two! Checking a little further, compared the rental rates in two popular condominium complexes in White Plains NY. Trump Tower was up a whopping 10% from 2010 and Jefferson place was up a more modest 4%. But given the short time span in which this has happened, it is time for renters to start thinking seriously about buying.
Rents are not going to be getting any lower because there is no incentive for this to happen. When they are flying off the shelf – landlords will be seeking relief since many were losing money every month with the recessionary rates. In many cases, rents were not even covering the costs of owning the unit. Since vacancy time is no longer an issue – owners will try to lock-in gains and we may see a rapid rise to pre-recession rates. For condos like Jefferson Place that means an additional 11% and for Trump that would be an additional 6%. For a 2 BR at Jefferson Place that would be an additional $325 a month beyond the median $2600 a month we have now (or an extra $3900 a year).
At some point renting will become more problematic. Already the affordability factor is starting to tip towards ownership over renting. One of the primary reasons that people buy their first home is to escape the gyrations of increasing rents… It looks like that’s where the market is headed now. Affordability for purchasing a Westchester condo, coop or home is better than it has been in over two decades. Low interest rates combined with prices that we haven’t seen in years won’t last forever. Indeed, prices in some sectors of the housing market are already edging northward. Waiting for an already amazing deal to get even better is like shooting craps or playing lotto. Since the renting vs buying pendulum is swinging the other way, you are more likely to lose than win. Since you can no longer count on recessionary rental rates that can be an expensive gamble.
© 2011 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
Please feel free to contact me anytime to request additional information or to set up an appointment so we can explore your listing or purchasing needs. I am easy to reach by phone, text or email. Or, if you just want to continue your search online, the links below will help you get started.