Because of news reports about instability in the current housing market, many prospective buyers are hesitant to buy a home. Many would-be homeowners start looking to rent a house or apartment instead. But when you compare the cost of renting a home in many markets across the nation, renting instead of buying is doing little more than make your landlord rich.
The price of rent has skyrocketed in many parts of the United States in recent years. The highest rental markets are usually around the major cities. Topping the list is New York City, where the average yearly rate is over $27 dollars per square foot. This translates to roughly $2,500 monthly. The price to rent in Manhattan is even higher, with the yearly average being over $48 per square foot. If you need three bedrooms or more, the rent is easily over $5,000 monthly.
While other major metropolitan areas are less expensive than New York, they are by no means cheap. Boston, Chicago, and Miami are all expensive when it comes to rental properties. Boston averages just over $25 yearly per square foot, while Chicago will cost $14 yearly.
Nowhere in the nation is the problem of high rent more widespread than in California. The rental prices in San Francisco are astronomical. The price per square foot is just over $27 yearly, only cents less than the average New York apartment. Los Angeles is nearly as bad at $25 yearly per square foot. Orange County, San Jose, and San Diego are also on the list of ridiculously high rent areas in California today.
In the Hollywood Hills, $10,000 a month will rent you a very basic house. For something nicer, expect to shell out $30,000 a month or more. That's the price of renting in paradise, among the rich and famous. Shockingly, $10,000 a month can purchase a $1.5 million home. That's nearly a million dollars more than the average home price in San Diego, not to mention the rest of Southern California. So why did rent pricing climb so high?
Rental prices often shoot up for a number of reasons. Sometimes there's a lack of new rental property being built, while other times rental properties are being converted. Today's market is witnessing record numbers of defaulted mortgage loans. Many people bought homes with adjustable rate mortgages a few years ago, and now that they payments are getting higher, they simply can't afford the giant mortgage payments.
But don't let this fact discourage you from buying a home! Because of the record numbers of foreclosures, homes are available at much more affordable prices today. Simply look into a fixed rate mortgage that fits your budget comfortably, and take a look at the wonderful homes that now fit in your budget. You'll be surprised how much more home you can afford today than you ever could before.
Your money will go farther, and you won't have to pad your landlord's pockets any longer. Instead, you can build equity for yourself. Over time, your property will almost always increase in value. With a rental, you are just throwing your money away. Strongly consider buying a home instead of renting if you don't intend on moving out of the area in the near future. You'll be glad to have the equity in the long run.
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