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Paul A. Disegna's Blog

By Paul A. DiSegna | Real Estate Pro in Rhode Island
  • Renters Outspend Owners on Housing

    Posted Under: Home Buying in Rhode Island, Financing in Rhode Island, Rent vs Buy in Rhode Island  |  October 26, 2011 3:19 PM  |  344 views  |  No comments

    RISMEDIA, Wednesday, October 26, 2011—

    Renters now spend five percent more of their household budgets on housing costs than do homeowners, and the difference is growing as rents rise.

    Since 2005, homeowners’ expenditures for housing have risen from 31.9 percent of their household budget to 33.2 percent, but renters’ costs have risen even more, from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.

    Since 1985, homeowners have increased their housing expenditure allocation by 12 percent, while renters increased by 22 percent.

    As consumers allocate more of their expenditures toward housing, they have less money to spend on non-housing consumption. The largest decline in a household’s budget occurred in transportation expenditures which fell by 17 percent and 22 percent since 1985 for homeowners and renters, respectively, CoreLogic said.

    The increased spending allocation for housing, which is largely due to the stagnation of incomes among Americans of home buying age beginning in the 1990s, has actually contributed to the decrease in homeownership by making buying a home more difficult.

    Demographics have also contributed to the decline in homeownership. For the 25 to 34 age group, the homeownership rate fell from 51.6 percent in 1980 to 42.0 percent in 2010. For 35 to 44 year olds, homeownership rates fell from 71.2 percent to 62.3 percent over the same time period.

    The CoreLogic report also found that a significant number of foreclosures are remaining on the market for as long as four years or more. One out of five REO foreclosures (21 percent) are taking more than a year to sell. Nearly 10 percent, or 23,200 properties that were auctioned in 2006, remained in REO as of Q2 2010. In other words, these properties have been in REO continuously since 2006.

    For more information, visit www.realestateeconomywatch.com.

  • Rising Rents Improve Investors' Returns

    Posted Under: Home Buying in Rhode Island, Home Selling in Rhode Island, Rent vs Buy in Rhode Island  |  October 21, 2011 2:38 PM  |  421 views  |  No comments

    RISMEDIA, Friday, October 21, 2011—

    With rents rising faster than last year, the picture for residential real estate investors is getting even better than it already was as a result of once-in-a-generation prices and low interest rates, according to the founder of a leading Internet platform for investors and real estate professionals.

    Greg Rand, CEO of OwnAmerica, downplays concerns over near term price declines and urges investors to take a long view of the opportunities.

    “This is a long term investment,” says Rand, who differs with what he calls the “get rich quick” approach to investing. “Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve. And they will. The best profits in real estate accrue to long term investors who take a long term view.”

    Rents are growing at a 5.17 percent annualized rate compared to a 4.72 percent at this time last year Assuming effective rent grows at the same rate in the next four months as it did in 2010, the full-year total would fall just below the historic highs of 2000 (6.18 percent) and 2005 (5.81 percent), according to a report from Axiometrics Inc., a provider of data and analysis on the apartment market.

    With 1.4 million new renters this year, apartment construction can’t keep up with demand. Tenants, especially former homeowners forced from their homes because of the economy, are increasingly turning to single family homes owned by investors, especially in high foreclosure markets like Las Vegas.

    During this year, investors have accounted for between 20 and 40 percent of monthly existing home sales, according to surveys of Realtors by Campbell/Inside Mortgage Finance and the National Association of Realtors. Yet, the investor market share may increase even more next year.

    A survey by Realtor.com in April found that by a three to one margin, investors plan to be more active in their local markets compared to typical homebuyers in the next 24 months, and 69 percent of investors say it’ll be easier to find properties in the near future.

    Most investors are newcomers. Fifty-nine percent (59%) said they’re new to real estate investing, with 33.5 percent considering their first investment purchase and 8.5 percent in the process of buying and selling their first investment property. Another 17 percent said they just completed their first transaction and plan to make more. Only 36.5 percent have experience in more than one property transaction.

    Author of “Crash! Boom,” Rand argues that even in the Great Depression, owning real estate was always better than not owning real estate. Holding real estate for the long term has always been a formula for success and most family wealth has been accumulated by purchasing real estate and keeping it in the family for many generations. Real estate plus time usually equals success.

    There are 6 million people who went from being owners to being renters, Rand says. “The stars are aligned to make this the best time in modern history to be a landlord,” he wrote in his book.

    For more information, visit www.realestateeconomywatch.com.

    RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

  • Seven Out of 10 Renters Say Owning a Home Is a Top Priority

    Posted Under: Quality of Life in Rhode Island, Home Buying in Rhode Island, Rent vs Buy in Rhode Island  |  July 9, 2011 4:32 AM  |  547 views  |  No comments

    RISMEDIA, Friday, July 08, 2011—

    RISMEDIA, July 8, 2011—Most Americans still believe that owning a home is a solid financial decision, and a majority of renters aspire to homeownership as a long-term goal. According to the 2011 National Housing Pulse Survey released recently by the National Association of REALTORS®, 72 percent of renters surveyed said owning a home is a top priority for their future, up from 63 percent in 2010.

    Seven in 10 Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home. The annual survey, which measures how affordable housing issues affect consumers, also found that more than three quarters of renters (77 percent) said they would be less likely to buy a home if they were required to put down a 20 percent down payment on the home, and a strong majority (71 percent) believe a 20 percent down payment requirement could have a negative impact on the housing market.

    "Despite the economic setbacks Americans have experienced in today's current climate, it is clear that a strong majority still believe in homeownership and aspire to own a home," says NAR President Ron Phipps. "However, achieving the dream of homeownership will become increasingly difficult for buyers if they are required to make a 20 percent down payment, which may be a reality for many of tomorrow's buyers if a proposed Qualified Residential Mortgage rule is adopted. That is why REALTORS® are strongly urging regulators to go back to the drawing board on the proposed rule."

    Defining the QRM rule is important because it will determine the types of mortgages that will generally be available to borrowers in the future. As currently proposed, borrowers with less than 20 percent down will have to choose between higher fees and rates today—up to 3 percentage points more—or a 9-14 year delay while they save up the necessary down payment.

    Over half—51 percent—of self-described "working class" homeowners as well as younger non-college graduates (51 percent), African Americans (57 percent) and Hispanics (50 percent) who currently own their homes reported that a 20 percent down payment would have prevented them from becoming homeowners.

    Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one's job security.

    The survey also found respondents were adamantly against eliminating the mortgage interest deduction. Two-thirds of Americans oppose eliminating the tax benefit, while 73 percent believe eliminating the MID will have a negative impact on the housing market as well as the overall economy.

    "The MID facilitates homeownership by reducing the carrying costs of owning a home, and it makes a real difference to hard-working American families," says Phipps. "Homeownership offers not only social benefits, but also long-term value for families, communities and the nation's economy. We need to make sure that any changes to current programs or incentives don't jeopardize our collective futures."

    When asked why homeownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind. On a local level, respondents said neighbors falling behind on their mortgages and the drop in home values were top concerns. Foreclosures also continue to remain a large concern, with almost half of those surveyed citing the issue as a problem in their area.

    The 2011 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR's Housing Opportunity Program. The telephone survey polled 1,250 adults nationwide, with an oversample of interviews of those living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points.

    NAR's Housing Opportunity Program,www.realtor.org/housingopportunity, was created in 2002 to encourage local REALTOR® associations to create initiatives that help increase housing opportunities available to consumers and make affordable housing more readily available in their communities.

    Information about NAR is available at www.realtor.org.

    RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

    Have you heard about RISMedia’s Real Estate Information Network® (RREIN)? RREIN is an elite network of leading real estate companies dedicated to providing consumers and their agents with leading real estate information, and committed to the belief that Information Share Equals Market Share. Having only launched this past June 2010, the RREIN network is already comprised of 40 leading brokerages, which make up 575 offices, 30,000 agents, 167,000 closings and represents over $41 billion in transactions. How can RREIN help your recruiting efforts and differentiate your company today? For more information, email rrein@rismedia.com.

  • Cost of Renting a Home Increasing

    Posted Under: Home Buying in Chicago, Financing in Chicago, Rent vs Buy in Chicago  |  April 13, 2011 5:35 PM  |  531 views  |  No comments


    April 12, 2011 by Jed Smith, Managing Director, Quantitative Research · Leave a Comment
    Filed under: Economic Indicators, Home Ownership, Renting 
    dyk041211
    • A number of articles have recently extolled the financial advantages of renting vs. owning a home.  Renters are, however, apparently finding that the cost of renting is increasing.
    • Forty-six percent of respondents to the recent Realtors® Confidence Index reported rental rates for apartments and homes to be increasing compared to a year ago, while another 16 percent of respondents reported rental rates as constant.
    • Declining rental rates were reported by 18 percent of respondents.
  • Renters and Home Ownership

    Posted Under: Home Buying in Chicago, Agent2Agent in Chicago, Rent vs Buy in Chicago  |  April 13, 2011 5:33 PM  |  483 views  |  No comments


    April 13, 2011 by Sophia Stuart, Marketing Associate · Leave a Comment
    Filed under: Home Ownership 

    According to a NATIONAL ASSOCIATION OF REALTORS® survey of 3,793 adults conducted by Harris Interactive and released in January 2011, home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy.

    The survey found that many renters aspire to homeownership. More than 6 in 10 renters are at least somewhat likely to purchase a home in the future and 24 percent indicate that they are extremely likely.

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    View results from the “American Attitudes about Homeownership” survey as well as charts and graphs here.

  • Buying Still More Affordable Than Renting in Most Cities: Report

    Posted Under: Home Buying in Rhode Island, Home Selling in Rhode Island, Rent vs Buy in Rhode Island  |  January 25, 2011 3:57 PM  |  354 views  |  No comments

    Buying Still More Affordable Than Renting in Most Cities: Report

    01/25/2011BY: JOY LEOPOLD Printer Friendly View

    Data released Monday by real estate Web site Truila says even with the current state of the housing and financial market, it is still more affordable to buy a home than rent one.

    Truila’s latest Rent vs. Buy Index studied the 50 largest cities in the United States and found that it is more affordable to buy than to rent a two-bedroom home in 72 percent of the cities.

    Based on the guidelines the company used to conduct the survey, only four cities – New York, Seattle, San Francisco, and Kansas City, Missouri – meet or exceed the price-to-rent ratio of 21 that means it is much more expensive to buy than rent in that area.

    According to the survey, a price-to-rent ratio of 1-15 means owning a home in that city is much less expensive than renting, and a ratio of 16-20 means the costs of

    homeownership exceed the cost of renting, but financially, it might still make sense to buy.

    “Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets,” said Pete Flint,CEO and co-founder of Trulia.

    He continued, “Though necessary for achieving true economic recovery, stricter bank lending practices have also further aggravated the struggling housing market in the short term. Even highly-qualified homebuyers face intense scrutiny on their income, savings, existing debt and credit history before they can get a mortgage loan.”

    The San Francisco, California-based Truila calculated the price-to-rent ratio using the median list price compared with the median rent on two bedroom apartments, condos, and townhomes listed on their Web site.

    Cities that were most affordable to buy versus to rent included Miami, Las Vegas, Phoenix, and Fresno. Las Angeles, Oakland, and Portland were among those that fell in the 16-20 price-to-rent ratio.

    “Although owning a home is relatively more affordable in most cities, market conditions have caused an interesting demographic swap between traditional renters and buyers,” said Tara-Nicholle Nelson, consumer educator for Trulia. “For example, lifelong renters are seizing the opportunity to become homeowners while affordability is high. At the same time, a growing number of long-time homeowners are finding themselves tenants – some by choice and others by necessity.”



 
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