September 2021
Buying a starter home is cheaper than renting
Buying a starter home is more affordable than renting in nearly half of the largest U.S. metros, including California’s Inland Valley, according to a study by Realtor.com®.
The study found that the monthly cost of owning a home in Riverside/San Bernardino/Ontario counties was $1,817, compared to $2,230 to rent. In the top 10 metros that favored first-time homebuying over renting in July, monthly payments on starter home were, on average, 24.3% lower than rents.
Still, first-time buyers will want to weigh the full costs of homeownership. If the monthly costs have been holding you back, data suggests it’s worth exploring in many markets. Although it’s still hard to find entry-level homes, we are seeing more smaller homes coming on the market.
Many of July’s highest rent gains were in secondary markets where rental demand has quickly climbed during the pandemic. Remote work has allowed workers to leave big cities and work from anywhere. That has also helped keep a lid on monthly starter home costs in some of the largest metros. The costs of starter homes, on average, were 15.5%—or $216—lower than rents in nearly half of the 50 largest U.S. metros, the realtor.com® study said.
California among top 5 states expected to grow the most in 2022
The U.S. real estate market is reaching unprecedented heights according to Porch.com. Over the past 18 months, home prices across the nation have shot up to levels unseen since the build-up to the 2008 financial crisis. In April 2021, the year-over-year growth of the Case-Shiller Index, the premier metric for housing prices, eclipsed 14.5% for the first time in its history.
Amid such sharp rises in price, housing markets across the country were ablaze this past year. According to Redfin, data revealed the percentage of homes selling above asking price shot up 13 percentage points compared to pre-pandemic levels. More than 60% of buyers were putting offers on houses sight unseen and the number of homes being bought without an inspection nearly doubled compared to the previous year. The message was clear: Buyers knew the real estate market was hot, and they did everything they could to get homes under contract and close the sale.
At the metro level, ranked by forecasted one-year change in home price, San Diego (24.7%), San Jose (24.5%), Riverside (21.8%), San Francisco (21.2%), Fresno (19.8%), and Sacramento (18.7%) are projected to see the largest increases in home prices in the next year. The area at the top of the list for small metro areas was Santa Cruz at 28.9%.
Buying property in your kid’s college town may be a good investment
Homeownership can offer more long-term perks for college students than a dorm room would, so parents are stepping in to help their college-age children buy a home in their college town according to BankRate.com. Real estate professionals, including myself, have noticed this long-held trend is growing.
With college students paying about $6,000 to $7,000 per semester or more—or $14,000 a year—for room and board, buying a home for grown children to live in during college could cut costs and offer a solid investment. And when the student graduates, their parents can use the home as a rental or sell it, but the potential cost savings and a more private place for adult children may be worth it to parents. July-August statistics for Santa Cruz, Monterey & the Bay Area
Comments: Santa Cruz County showed an increase in sales with Santa Clara County was the opposite. Typically, this holds true as Santa Cruz is a month or two behind SCC. Prices are still holding steady yet considerably higher than 2020 at this same time for Santa Cruz (15.6%) and Santa Clara (19.8%). The days on the market ticked up a bit and list to sale price ratio ticked down for all three counties. We should see more of the same as fall continues and the season slows. Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS.
