Personal Finances

Two More Good Reasons To Quit Renting and Own a Home

First time home buyer tips. Man carries his wife past moving boxes and into their new home.

Friends of mine throughout Portland have been stressing. Their landlord keeps raising the rent.

A rent hike is a difficult pill to swallow, especially if you’re sticking to a budget. It feels like you’re getting squeezed. You’re losing more of your money, period.

The rent hikes are making it harder for young professionals to build savings and start a family. They’re making it harder to live in Portland altogether – at least if you’re renting.

While current conditions are making it harder to rent, others are making homeownership more appealing.

How High Is Rent Climbing?

A recent article in The Oregonian by Elliot Njus entitled “Housing, income and jobs reshape Portland in the last decade” details some sobering statistics:

“Median rents paid across the Portland metro area grew faster than wages, particularly for members of rental households.”

What that means: When your rent rises faster than your wages, you can forget about building up savings. You might struggle just to break even on your finances.

“More than half — 53 percent — of Portland-area census tracts aren’t affordable to median-income renters living there without spending more than a third of their income on rent. That’s up from a third in 2012.”

What that means: As a rule of thumb, it’s ideal to avoid spending more than 30% of your income on living expenses. That includes utilities, trash, and the rest.

The majority of renters are now spending more than 33% of their income on rent alone. This makes it more difficult to grow your finances.

“The median rent across the metro area, without regard for home size, has climbed 22 percent, from $916 to $1,118.”

What that means: Similar to college tuition rates, rent payments are climbing faster than the things that counterbalance them. Over the same timeframe in the area, median household income only increased 7.6%. It all leaves renters with less money for savings, loan payments, or anything else really.

What Is a Renter To Do?

For those who want to break out of the renting cycle, there is another option. Recent circumstances are making homeownership a better decision for a number of young professionals today.

Here are two solid tips for first time home buyers:

  1. The housing market is (finally) returning to normal. The multi-year housing boom is finally slowing down. The market is now more buyer-friendly than it has been in years. Housing supply and demand are evening out, meaning buyers are gaining more leverage and sellers are dropping prices. If you’re thinking about buying, the odds are moving in your favor.
  2. You don’t need a large down payment to own a house anymore. For qualified buyers, the First Time Homebuyer loan offers home ownership with as little as a $0 down payment. If you have good credit and meet a few other requirements, you can finance up to 100% of your home – and still pay nothing in dreaded Private Mortgage Insurance.

The First Time Homebuyer loan is Unitus’ way of recognizing a large group of our members: smart, financially responsible renters who don’t have a lot of money saved up. You’ve managed your money well but haven’t had the time to build your savings yet, or have put your savings into tax-deferred retirement accounts.

This is our way to remove the home owning hurdle of needing a large down payment. This is another way to help you start building the life of your dreams.

You can break free from the renting cycle and start investing back into your own vision. You have local experts here to help you make it happen.

To learn more about the First Time Homebuyer program, discuss the market, or plan your next move, speak with a Unitus Mortgage Relationship Officer today at 503-423-8713.

About the Author: Brad Goodenough joined Unitus Mortgage in November of 2013. He began as a dedicated mortgage originator and has developed into a results-oriented sales manager focused on maintaining a high level of service and integrity across the Home Loan team.

Throughout his career in financial services he has gained expertise in multiple lending platforms and local housing markets.

He owes his success to his first professional priority: to add value to his community by sharing knowledge and always providing honest, reliable information.

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