Really? Ann Arbor you’d rather rent than buy a home?
Take a look at this graph which shows the median home price in October 1980 and the median home price in February 2013. Now think about renting or buying a home in Ann Arbor ?
When we moved here in 1980, we rented for a year and then bought a home. We had an 11% interest rate on a Land Contract and were thrilled. The home was priced at $68,000.00.
A land contract is a valid sale in the State of Michigan, where the owner is in essence the bank, holding the loan. You make payments to the owner at an agreed on interest rate. Usually 2 percentage points above the going bank rate.
Three things to know about in renting vs buying
Median home prices have gone up 3.5 times in 32 years. (US Census)
The payment on owning a home is about the same as it was 30 years ago. (Freddie Mac)
Average rent is up 4 times in 32 years. (Zillow)
How long can these rates last?
Take a look at this chart of over 200 years of mortgage lending.
Still think renting is a wise investment?
This is not to say that it is not in a person’s best interest to rent vs buy for a while. Due to the many short sales and foreclosures in Michigan the last few years, some who want to buy can not buy due to credit issues. If you have a short sale on your credit, typically you have to wait 3 years and can get a new loan IF you have kept all your payments up on utilities, cable, and other consumer debt.
Information provide my a trustworthy, fantastic lender:
2075 W Big Beaver Rd. #400 • Troy, MI 48084