Back To Blog

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.

Add Comment

Comments are moderated. Please be patient if your comment does not appear immediately. Thank you.

Comments

  1. No comments. Be the first to comment.