The New Cost of RENTING

The New Costs of Renting Wall Street Journal / Smart Money


FREAKED BY THE HOUSING MARKET , more would-be home buyers are opting for rentals – driving rents up along the way. But it's not just rising rents that new renters have to worry about. A handful of new costs could make renting less than the bargain it appears. The average national vacancy rate for rentals fell 17% last year to 6.6%, according to Reis, Inc., which tracks rental performance data. And as renting has gotten more popular, prices have jumped. The average monthly rent, including studios, one- and two-bedroom apartments is now $986, based on Reis data. Before the recession, the average was just $930. And in some markets, it's far worse: In New York, rents are up 9% on average in the last five years; in San Jose, they're up 8%.The market is only likely to get tighter. For the first time in memory, the federal government is actively encouraging people to rent, rather than buy. The Obama administration's recent housing proposal calls for a larger rental market and limits home ownership . Not that renting needed the endorsement: It's already attractive to anyone hesitant to commit to a home in an uncertain job market, those who can't qualify for a mortgage, and people waiting for a more stable housing market before buying. And some people just don't have a choice. Skyrocketing foreclosures have left thousands of former homeowners with no option but to rent, says Frank Nitschke, principal at Prudential Real Estate Investors Research. And with another five million homes expected to go into foreclosure over the next two years, according to RealtyTrac.com, that means more renters will soon enter the market and could drive rentals up even more. The rise in demand almost certainly means higher rents, which are projected to rise by 3.4% by the end of the year, according to Reis, and fewer of the perks that became popular during the recession, like two or three months' free rent for anyone willing to sign a one-year lease. While shopping around, new renters should look for landlords who are still willing to provide free months of rent – a trend that has been declining during the past year, but is still more widely available than it was pre recession, says Ryan Severino, a senior economist at Reis. Existing renters might save money by renewing their lease sooner than later when rents are likely to be even higher, he says. Before signing a contract, look for wording that promises not to raise rents during the lease period. By end of year, rents could rise even further should inflation pick up. But there are other costs, too, that can take a bigger bite than many renters expect: Insurance, storage fees and, in cities where housing costs have plummeted, opportunity costs. Suddenly, home-ownership doesn't quite sound so bad. Storage costs For former homeowners, renting often means living in a smaller space – which means taking the 8-foot dining room table or the piano to storage. At Public Storage, among the largest U.S. storage companies, the popular 100-square foot unit – about half the size of a one-car garage -- can cost up to $270 per month, depending on location. (The average price is around $150.) There's also a one-time fee of around $20 to sign up. The company's U.S. same-store revenues were up modestly in the third quarter compared to a year ago, and "there's no doubt, foreclosures have helped the industry," says Clemente Teng, the company's vice president of investor relations. To lock in the most affordable rental, look online: Companies often offer lower prices online than they will over the phone. And since prices can vary by location, check out the options a town or two over. Consumers shopping for a space now might want to consider locking in the price – when home sales and moves pick up in the summer, storage prices tend to rise. Insurance fees There's no reliable data, but anecdotal evidence suggests that more landlords are requiring tenants to sign up for renter's insurance, says Loretta Worters, a vice president at the Insurance Information Institute. They're concerned about getting sued if someone gets hurt on their property, and while the extra cost may seem unnecessary at first, it makes sense: A typical policy covers a tenant's possessions and pays for hotel stays and additional living expenses in the event a rental is destroyed or seriously damaged. Premiums usually range between $100 and $300 per year, according to State Farm, and vary based on location and amount of coverage. Some renters may want additional coverage, because most policies place a limit of up to $2,500 – total –on jewelry, fur, silverware, gold, art and rugs, whether they're destroyed or stolen. A supplemental policy, called a floater, costs on average $7.50 per $1,000 worth of jewelry, says Scott Simmonds, a Saco, Maine-based insurance consultant. Missed opportunity In some cities, the housing market has fallen so far, and the rental market has gotten so tight, that rent could cost significantly more than a mortgage on a comparable place. In Miami's Dade County, for example, a two-bedroom apartment costs $1,206 on average in rent; monthly mortgage and property tax payments on the same property, based at the median list price of $209,000, would cost $774, according to Movoto.com, which tracks sales and rental prices. Over five years, that's a savings of almost $26,000 – not even including the tax break for mortgage interest. In Fairfax County, Va., the markets, and savings, could be similar. To determine whether owning is cheaper than renting in a specific neighborhood pull up equivalent for-sale listings online or speak with a realtor and use a rent-or-buy calculator to compare the monthly cost of renting and owning. And if the monthly savings are significant, there are other compelling reasons to buy, says John Mulville, a senior vice president at Real Estate Economics, which tracks residential real estate data: prices are low, as are mortgage rates.

Foreclosure Video about the Crazyness:

http://www.youtube.com/user/fiercefreeleancer

Homeownership Rate Hits 10 Year Low. Watch Out for Rent Inflation

Homeownership Rate Hits 10 Year Low. Watch Out for Rent Inflation
by Adam Quinones
The Census Bureau has released its survey of Residential Vacancies and Homeownership for the fourth quarter of 2010.
Homeowner Vacancy and Rental Vacancy statistics are from the Housing Vacancy Survey, which is a supplement to the Current Population Survey. The homeowner vacancy rate is the proportion of the homeowner inventory which is vacant for sale. The rental vacancy rate is the proportion of the rental inventory which is vacant for rent. A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent. In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere.
Quick Recap.....
Total Housing Units in the United States: 130.85 million vs. 130.19 million in Q4 2009
How Many Are Occupied: 112.45 million (85.9% of total) vs. 111.37 million in Q4 2009
How Many Are Owner-Occupied: 74.78 million (57.2% of total) vs. 74.81 million in Q4 2009
How Many Are Occupied By Renters: 37.67 million (28.8% of total) vs. 36.56 million in Q4 2009
How Many Homes Are Vacant: 18.39 million (14.1% of total) vs. 18.82 million in Q4 2009How Many Homes Are Being Held of the Market: 7.23 million (5.5%) vs. 6.77 million in Q4 2009
Excerpts from the Release...
The homeownership rate of 66.5 percent was 0.7 percentage points (+/-0.4%) lower than the fourth quarter 2009 rate (67.2 percent) and 0.4 percentage points (+/-0.4%) lower than the rate last quarter (66.9 percent).
REGION: For the fourth quarter 2010, the homeownership rates were highest in the Midwest (70.5 percent) and lowest in the West (61.0 percent). The homeownership rates in the Midwest, South, and West were lower than a year ago, while the Northeast is the only region with a homeownership rate statistically unchanged from the corresponding fourth quarter 2009 rate.
AGE: For the fourth quarter 2010, the homeownership rates were highest for those householders ages 65 years and over (80.5 percent) and lowest for the under 35 years of age group (39.2 percent). The rates for householders less than 35 years old, 35 to 44, and 45 to 54 years old were lower than their respective rates a year ago, while those householders 55 to 64 and 65 years and over showed no significant change from their corresponding rates in the fourth quarter 2009.
RACE: The homeownership rate for the fourth quarter 2010 for non-Hispanic White householders reporting a single race was highest at 74.2 percent. The rate for All Other Races householders was second at 57.7 percent and Black Alone householders was lowest, at 44.8 percent. The homeownership rate for Black Alone householders was lower than in the fourth quarter 2009, while the rates for non-Hispanic White and All Other Race householders was not statistically different from one year ago. The rate for Hispanic householders (who can be of any race), 46.8 percent, was lower than the rate one year ago.
INCOME: In the fourth quarter 2010 the homeownership rate for households with family incomes greater than or equal to the median family income was 81.7 percent. The rate for those households with family incomes less than the median family income was 51.4 percent.

Mortgage Industry News 1-23-2011 From Standart Examiner Ogden Utah

Mortgage brokers get the boot By Jesus Lopez Jr. Standard-Examiner staff


• Utah

With interest rates and house prices at historic lows, it is the perfect time to buy a home. But before a purchase is made, a bank loan officer or a mortgage broker has to approve a home loan for the buyer. Bank of Utah Chief Financial Officer Branden Hansen cautions prospective buyers to make sure the person they are dealing with is reputable."As a bank and being involved with the mortgage industry," Hansen said, "we had to compete with a lot of people we feel are less than scrupulous."Luckily, new laws are in place to protect home buyers. A new regulation that went into effect Jan. 1 requires all mortgage loan originators, associate lending managers, branch lending managers, principal lending managers and mortgage entities to be licensed. Those with previous licenses had until Dec. 31 to meet the federal Nationwide Mortgage Licensing System deadline for renewal and had to complete the required education and test. All mortgage originators, regardless of who they work for, are issued an identification number. Their activity can be tracked through the Utah Division of Real Estate. Hansen said he applauds the efforts of the government; including making licenses a nationwide requirement. Although Utah has generally maintained good practices, previously a disreputable mortgage broker could leave another state and set up shop in Utah. The nationwide licenses make it possible to track lenders through an identification number."In its heyday, 2006-2007, there were mortgage brokers on every corner," Hansen said. "These people were not very well regulated. They pretty much did whatever they wanted to."It was a business that attracted people looking for easy money."The ranks of loan officers swelled to astronomical numbers," Hansen said. "There wasn't anyone watching what you were doing."The biggest draw was the subprime mortgage market. Many people came in that did not understand the industry, Hansen said. They were basically just sales clerks taking signatures. It got to a point that Hansen said people would originate loans and hand them off to a friend who had a license. After the market collapsed, the number of mortgage brokers dwindled. According to the Division of Real Estate, 2010 began with 9,027 mortgage licensees. Only 5,200 of those licensees transitioned onto the database by the May 31, 2010, deadline. Of the 5,200 licensees in the system, only 2,000 have requested renewal and met requirements. Hansen suspects many joined up with banks and credit unions, but most fled the industry altogether."I think the loan officers that are left are pretty successful, pretty experienced," he said. Those who failed to request renewal will have to reapply for licensure by completing 60 hours of relicense education, pass both state and national exams and reapply for a license. However, Hansen said, this regulation should have been put in place before the market collapsed. The problems were in so many parts of the system that the collapse was catastrophic."It's kind of like we're getting this regulation a day late," Hansen said. "It wouldn't have prevented it entirely, but it could have helped."