In Philadelphia now is a good time to make the jump to homeownership.
The U.S. government has pushed hard to make homeowners out of one-third of Americans who still rent their homes. It introduced and later extended a tax credit for first-time home buyers, and has kept federal interest rates at their lowest levels since the 1940s.
Market conditions are such that now is a particularly good time for some renters to take the hint.
Whether to rent or buy is a complex decision, but timing is important. In Philadelphia, the premium to buy–the difference between what you’d pay monthly to own a home, rather than rent–has dropped dramatically. In Philly the step up from renting to buying is a much smaller one than usual. Buying isn’t necessarily cheaper than renting and in fact, it often remains a more expensive proposition. But if you are determined to own a home in Philly that investment is a better one now than it normally is.
The next thing to consider is whether your home will appreciate. With strong industries in Philadelphia (healthcare / pharmaceuticals) and a relatively healthy labor market that will keep generating new jobs the demand for homes will increase and therefore home prices will go back up.
So upgrading will cost much less than usual and home buyers are likely to get a good return on their investment.
- Premium to Buy, 15-year Average: 28.4%
- Premium to Buy, Q3 2009: 18.7%
- Five-year Home Price Index Forecast: 13.85%
- Median Rent: $957
- Median Home Price: $227,500
- Blended Mortgage Rate: 5.33%