Last year, many people wanted to rent instead of buying a home because they thought that the bottom was still falling in the real estate market.
This year, people have too many choices and they are feeling too much pressure to purchase so we’ve recommended that some of them rent first.
Here are some reasons people rent:
1) Job transfer comes fast. We have clients that are moving here from Eastern Washington and they have dogs instead of children. They have accepted a job and are arriving in 3 weeks. When schools are not a requirement, it is often a good idea to rent in short-term corporate housing or a shorter lease so that the pressures of a new job can be lessened by not having the pressure of finding a home quickly in a higher priced market area.
2) We’re selling our home but looking to make a big change to “Island Life.” As you know, Washington has many islands that are connected to Seattle by ferry service. Residents of Bainbridge and Vashon can commute to Seattle either by car or by walking on the ferry. While it isn’t quite like the Staten Island Ferry that I knew growing up, the Washington Ferry system is amazing. But, when you go from taking a park and ride to taking a ferry, it is better to rent and see if you like the lifestyle before you commit to buy. If you’re not happy with your decision, you have an adventure, not a costly burden.
3) Downsizing, but can’t buy before we sell. Many clients that have been in their home for a number of years and know that they want to downsize. With so much money tied up in their current home, people can’t buy something before they sell. In this market, contingent offers are not very successful and since you usually have 45-60 days to get out, you may not find your next perfect home that quickly.
4) Financial problems won’t allow us to buy. Over the past few years, many people have gone through some very tough financial times. Some people have gone through bankruptcy, some have sold their homes as “Short Sale” and don’t have any finances left to purchase another home. We have recommended that they rent, get their finances in order and heal their financial wounds. In a couple of years, you'll be able to purchase again if you want.
We are experiencing a lower rate of appreciation now of 3-5% per year. In Washington, it costs just under 10% to sell your home with commission, excise tax, title and escrow and there are always a few things that need to be done before and after you get a contract. If you buy the wrong home and need to sell in less than 5 years, you may need to bring money to the closing table – and that’s no fun!
We love to sell homes, but we don’t want to sell you a home when the timing isn’t right. We tell all our clients, "we want you to buy the kind of home that if you call us in a couple of years and want to sell, it won't be a problem. Renting is a great option and we’d be glad to help you there too when we can.