In the current housing market, flexibility and creativity have become important skills. Homeowners who are ready to—or have already—put their property on the market are faced with the challenge not only of finding the right buyers, but of finding any buyer at all.
With local and national statistics showing that it’s still a buyer’s market, more and more homeowners are putting off selling, and becoming landlords instead. And folks who might otherwise buy are signing leases.
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“People are choosing to rent instead of buy, and the ones I have encountered are primarily people who have been transferred, for work, and they haven’t been able to sell their home in their prior city,” says Denise Ramey, local real estate expert with Roy Wheeler Realty Company. “Many [newcomers to this area] are entering in six- to-12-month leases with the hope that when their house sells, they’ll know the area a little better, and they will have more funds.”
Ramey says the dilemma of renting versus owning has been a major topic of discussion among Realtors nationally. While Freddie Mac’s U.S. Economic and Housing Market Outlook for the month of May reports a 2.8 percent decrease in home prices around the country in the first quarter of 2011, the inventory is still very high.
Many homeowners who decided to rent out their houses find themselves lacking enough equity for a down payment on another purchase, and are forced to become renters themselves while they save up.
Such folks may enter what’s called a lease-purchase agreement, in which “they are going to lease for one year to give themselves time to save up the 20 percent down payment,” explains Ramey. “The purchase agreement will occur the next year.”
Greg Slater, Realtor with Better Homes and Gardens/Real Estate III, has a client who was forced to rent his home for the past two years, but is now tired of being a landlord. Tough luck. Because his home is still not selling, “we are starting to talk about renting it again,” Slater says. “I think it will rent in about 10 minutes when he decides to rent.”
Indeed, demand for rentals is up. And because of that, rents have increased in the past two years. “I think people who have rental properties available can afford to be more choosy now about who they rent their property to,” says Ramey. “They can command more in rent.”
Slater agrees. For example, he says, “People are shocked at what it costs to rent in Crozet. It can be really high.”
“There are more tenants around,” says Slater, in part because the past few years left lots of folks with credit problems. “If they left the market with a short sale, they will be tenants for a couple of years,” says Slater. A short sale damages a property owner’s credit and it can take at least two years for mortgage companies to be willing to issue them a new loan.
Because it is still a challenging time for buyers and sellers, Ramey says many real estate agents are more willing to help renters. “Smart agents are willing to help clients who are renting today because they are the buyers of the future,” she says. “It’s definitely a change in our business that our agents had to become accustomed to.”
Slater’s tip for would-be renters: “The number one strategy to get a rental home in Crozet right now is to call the people who have their homes for sale and ask them to rent it,” he says.