Podcast - January 13, 2023
Are you currently renting and think you may want to keep renting due to the increase in interest rates? Not sure how much money you may need for a downpayment to buy a home? If you fit either of those you will want to tune in to hear Tom and Jay discuss those along with additional information that anyone considering buying a home should hear. Also if you always wanted a hobby farm you will not want to miss the house of the week located in Falling Waters, WV for just $265,000!
I'm Tom Whalon.
I'm Jay Day and the Day Home Team of Real Estate Teams with our weekly real estate podcast.
Jay, with the interest rates like they are right now, tell me why wouldn't I rent right now and wait for the interest rates to go down?
Well, that's an interesting question and it's a question we do get a lot from people that are looking, or they'll call in and say, Hey, do you do rentals? And we're like, no, we don't. However, have you thought about purchasing? And I mean the big thing is realistically, every year someone who's renting has to make a decision. Am I going to stay here? Am I going to continue to stay where I am? Am I going to rent somewhere else or am I going to finally go and purchase something? Now, there was an interesting thing that came out from realtor.com and they said three out of four renters 70, which is 74.2%, to be more precise, who have moved in the past 12 months reported seeing their rent increase. The strain from rent hikes is exclusive to renters who have recently moved nearly two-thirds and they're saying 63.2% who've lived in their current rental between 12 and 24 months likely.
And the ones that likely renewed their lease have also reported increases in their rent. So not only are interest rates increasing, your rent costs have been increasing as well. So it's not like the mortgage rates have dropped or gone up and then rent costs are coming down. So rent costs are coming up as well. And then if you look at different things, they're expecting that the rent growth is going to continue. So their forecasting, if we go back to historical data there was a 5% increase between 2013 and 2019. There was a 10% increase in 2021, and 7.7% increase in 2022. And they're forecasting another 6.3% increase in rents in 2023. So I know in this area, people I've talked to that their rents are already sort of crazy.
So lemme ask you a question. If somebody's renting, renting, renting and it's getting crazy, what's the biggest obstacle they faced to purchase a home?
Well, the biggest obstacle recently was lack of inventory. They couldn't find something in the timeframe needed. Now, the funny thing is though, what most people think the biggest obstacle is they don't have the money to do it. And to be very candid, before the last couple of months that might have been true because as we talked about, people had to pay over asking price, they had to pay over what the appraisal was, they had to pay all their closing costs help, and then they had to down payment too. So one of the important things is a lot of people think for some reason that they need 20% down for a down payment. That is not the case. You do not need 20% down. I mean, if you're thinking about buying and you're like, I don't have the money, you are going to need to have some money.
Yes, that is true. However, if you reach out to us, we can put you in touch with our lender. There are some programs in parts, the areas we cover that you can get U S D A financing, which is a hundred percent financing, so it's no down payment. Then there's FHA options where you need three and a half percent down. They're conventional options where you only need 5% down. If you're a veteran, there's a VA option, which is 0% down. So you don't necessarily have to have a ton of money for a down payment. And like we talked about on our last podcast back a couple months ago, you know, were going to have to pay all your closing costs and closing costs can be pretty expensive in the state of Maryland. And it's not cheap in other areas either. But Maryland's a little heavier price than with closing costs than Pennsylvania, than West Virginia.
So West Virginia is one of the more affordable spots. So when we're talking about that, and we went into the stats last podcast that a lot of the areas like Frederick County was over 40% of the last 30 days of sales. The seller had to give the buyer closing help in those transactions. So to me it's almost like a perfect yeah, I don't want to say a perfect storm, but it's in a situation. Now, if your lease is coming up where I can probably get, there's a little more inventory, things are sitting on the market a little bit longer I can possibly get closing help depending upon where I'm looking. If a home's been on the market a little longer, they may be willing to take a USDA financing as opposed to needing 5% down for conventional. So now there's all these different caveats that come into play.
But the biggest thing is, and it's funny because people, some people think the same thing with becoming an investor and getting properties and building wealth and things like that. I don't have enough money to do this. I don't have enough money to do this. Well, and I mean, I hate these cheesy sayings that go out there, but one of the memes and stuff that I've seen online is about renters and it says, yeah, renters will complain about interest rates increasing. That's why they're not going to buy. But when you rent, your interest rate is a hundred percent because a hundred percent of your payment is not going to anything. So again, as cheesy as it sounds, it's very true. Where
Where did that 20% come from? Because when we talked about what we were going to talk about today, I thought, well I this, you got to have 20%. Where'd that come from?
Because the traditional mindset, a conventional loan, at one point it was a 20% down product, so you needed 20% down to get a conventional loan. Now, if you're buying a second home, an investment property, that can be a 20 to 25% requirement. But if we're talking primary residents, not investment properties 20% is not the case at all. And like I said, the key is don't wait until the month before your lease is up. You need to plan this. And we've worked a lot with people that call us six months, eight months before their lease is up, we get them lined up to do what needs to be done, and then we pull the trigger when the time makes the most sense and we get them through things. Now, some of them, we end up getting them a house two months before their lease is up.
But the way we explain it, let's say that their lease is up. What are we? We're in January. Let's say their lease is up in March. You go under contract for a house. Now you close in February. Your first payment's not due until March anyway, so you really didn't have any duplicate payments at all. There's a way to handle all of it. And the key is don't believe the myths. There are different things that are online. I mean, the challenge in today's world is there's so much information available online and you don't know whether it's true or not. You know what I mean? It's sure.
I don't believe anything.
I mean, it's just crazy mean even now too. You go and you chat with things and you're like, is this a person? Is this a robot? Is this AI?
I understand. What in the world am I dealing with? And I will tell you the one thing because people joke and say, to go into that about the AI stuff, will you need real estate agents with AI? Well, people do. This is a personal situation, this is a personal transaction. You know, do need to have someone that you can relate to, that you can talk to that has the experience. That's where I think we sort of come into play and we can help walk you through the process. So if you're thinking about buy-in, just give us a call. 866- 702- 9038. We have a ton of buyer agents that specialize in working with buyers. First-time home buyers. This could be the 20th home you've purchased out of state, whatever the situation is, we have a team of agents that can handle it. And we're here to answer your questions.
You got a home of the week?
I do. This is a cool property, 188 Smaltz Drive in Falling Waters, West Virginia, listed for 265,000. This home has great bones and has lots to offer. It's a 1907 farmhouse that needs some TLC and then it'll shine once again. It's located on a level two-acre corner. The lot offers multiple outbuildings. The property welcomes all animals and would make the perfect farm at home. Features the new roof, which was done in 2020. And the furnace is only five years old. Plenty of storage space awaits with a spacious walkup attic. The unfinished basement with built-in shelving. The lot is available to be subdivided if desired. Just minutes from the Maryland line, the Potomac River, and offering easy access to local commuter routes. Go to WFRE.com. Look up Tom and Jay's real estate podcast. You see this house of the week. If you like what you see, click on the button, the schedule is showing and one of our agents will schedule a private tour for you.
I'm Jay of Jay Day and the Day Home Team of Real Estate Teams Weekly Real Estate podcast. Thank you for listening and tell your friends all about it.
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