Renting

Why Buying a Condo in Montclair Now Makes (Dollars and) Sense

I've been reading a lot lately about our national housing crisis, and there are definitely some sobering statistics out there. According to a recent article in The Wall Street Journal, home ownership is falling at the fastest rate since the Great Depression. There is a silver lining, though: now is a really good time for renters to buy a home.

Jack Hough, the author of the WSJournal article, explains that because house prices have fallen so dramatically since 2005, the ratio of house prices to yearly rents is shifting in favor of buying. He compares a house's price/rent ratio to a stock's price/earnings ratio; in both cases a lower ratio means that more income can be generated for the price paid. And the price/rent ratio has been dropping steadily over the past several years.

Most first-time home buyers are primarily concerned with getting a  mortgage, and here too, the numbers are in their favor. The 30-year mortgage rate is currently just over 4%, almost a record low. Mortgages are not as easy to obtain as they were during  the housing bubble, but qualified applicants (those with a job, a good credit rating and enough cash for a down payment) will be rewarded with low monthly payments.

Here's a current example of a 2 bedroom "rent" option in Montclair vs. a 2 bedroom "buy" option.

  • RENT: 18 Baldwin Street. 2 bedrooms, 2 bathrooms. Rent: 2300/month
  • BUY: 50 Pine Street. 2 bedrooms 2.5 bathrooms.  Mortgage: $1050, property tax $695, HOA fee $225 = $1970/month
It's  $330 less per month to own than to rent a comparable property.  Not to mention the savings from the tax deductions you'll take on mortgage interest and property taxes.

The bottom line for renters: now is the time to take the plunge.

To Rent or To Buy...That is the Question.

Montclair rental - gone in 1 day

Real estate is always a "good news-bad news" business. The most obvious example of this is an overheated market: great news for home sellers, lousy news for home buyers.  An article I read recently in RISMedia,  an online trade publication, discusses another good news-bad news situation: the current rental market.

The article cited a study by the Harvard Joint Center for Housing Studies, which concluded that the fledgling national economic recovery will actually hurt renters. More Americans are finding new jobs, but these jobs often pay less than their former ones, so they are choosing to rent a home instead of buying one.  In addition, the continuing foreclosure crisis means that many former homeowners can now only afford to rent. With no real increase in multifamily rental units planned by developers, rental units will almost certainly become scarcer and thus more expensive.

Montclair is already showing signs of upward pressure on the rental market - There are only 35 rental units at the moment listed on the MLS as compared to 230 that are currently for sale.  As a New Jersey Realtor, I have firsthand experience with this trend: I listed a 1 BR condo renting for $1850/month in a loft-type building in Glen Ridge, walking distance to the NYC train, on Saturday; by Monday, it was gone.

The good news in this scenario: a poor rental market often means it is a good time to buy a home. Mortgage rates are at their lowest in years, and home prices have dropped significantly from several years ago. Are you looking for more space for your growing family? Have you been considering buying a multifamily property as an investment? If you answered "yes" to either of these questions, then take advantage of the good news (for buyers) and make your move before the tide turns again.

Should I use an real estate agent for a rental? Check out this Maplewood scam...

As you may or may not know, rental transactions are a marginal business for real estate agents.  They require many hours, uncertain payoff and a very small commission.  However, many agents handle rentals with the knowledge that renters often become buyers at a later date and therefore view it as an investment in a relationship rather than a source of revenue.

It is typical in rental transactions for the tenant to pay the commission or fee (although occasionally, the landlord will pay if the there is much competition or if the property is difficult to rent).  Many prospective tenants look for ways to avoid  the fee - who doesn't want to save a buck, right?  My approach has always been to tell my rental  clients about the many ways to rent without paying a commission.  I figure that my good advice is as valuable to the relationship as anything else.  Here are my strategies for the D-I-Y renter:

  • Knock on the door of the superintendent  in large rental buildings.
  • Call the management company of rental buildings, usually listed in the lobby.
  • Drive around looking for "For Rent" signs put out by the owner or manager.
  • Craigslist.org

If you have more time than money, these strategies may work well for you.  One caveat for craigslist : Be certain that you are dealing with the owner/landlord or a bonafide agent for the landlord.  In this recent craigslist post, a person posing as the owner of a Maplewood NJ house has advertised it for rent (at a below market-rate price).  The house is not, in fact for rentbut it is for sale.

"Hello      I can see you are interested in the ad I have pasted, I am currently in West Africa where I work as a volunteer with the RAFIKI FOUNDATION,here is the site for more detail about why I am here in Africa.( http://www.rafiki-foundation.org/). So I need a tenant to take care of it but since  I am out of the state now, I have received some proposals regarding the rent because it is located in a very good area of Maplewood, but I still have to make sure it is rented out to someone who can take good care of it. It includes facilities such as water and heat laundry facilities,  air condition, internet and telephone access and a car park and other necessary facilities, also comes with trash collection,pets are allowed as well as long as they are not destructive. so if you know you are capable of the task, get back to me so that I can provide you with some questions that I would want you to answer.below is the location.  101 Parker Ave, Maplewood, NJ."

Sounds vaguely like the Nigerian prince scam.  Renter beware.

Comments

  1. Austin on

    I just got the exact, word for word, response for a rental in Florida. I was looking to see if it was a scam. It is clear that it is now. Stay away. I certainly will. What was incredible for me was that the house actually existed. You can visit the "supposed" rental and it DOES have a sign in the yard. They must prey on renter's and rentee's
    • D. DeMattia on

      I just got the email from Robert Mock (supposedly), telling me to send $1400 to him in west Africa where he is volunteering for the Rafiki Foundation. I suspected the ad was odd, so I went looking. The exact same wording was used for a home here in Leesburg, the for sale sign out front. They are using a home that is for sale, and use the name of the owner too. Thank you for having this on the web...
      • RENT a CAR on

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