Avoid the Rental Trap in 2022

Avoid the Rental Trap in 2022

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Are you one of the many renters thinking about where you’ll live the next time your lease is up? Before you decide whether to look for a new house or another apartment, it’s important to understand the true costs of renting in 2022.

As a renter, you should know rents have been rising since 1988 (see graph below):

 

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In 2021, rents grew dramatically. According to ApartmentList.com, since January 2021:

“. . . the national median rent has increased by a staggering 17.8 percent. To put that in context, rent growth from January to November averaged just 2.6 percent in the pre-pandemic years from 2017-2019.”

That increase in 2021 was far greater than the typical rent increases we’ve seen in recent years. In other words – rents are rising fast. And the 2022 National Housing Forecast from realtor.com projects prices for vacant units will continue to increase this year:

“In 2022, we expect this trend will continue and fuel rent growth. At a national level, we forecast rent growth of 7.1% in the next 12 months, somewhat ahead of home price growth . . .”

That means, if you’re planning to move into a different rental this year, you’ll likely pay far more than you have in years past.

Homeownership Provides an Alternative to Rising Rents

If you’re a renter facing rising rental costs, you might wonder what alternatives you have. If so, consider homeownership. One of the many benefits of homeownership is it provides a stable monthly cost you can lock in for the duration of your loan.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“. . . fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”

If you’re planning to make a move this year, locking in your monthly housing costs for 15-30 years can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases.

Homeowners also enjoy the added benefit of home equity, which has grown substantially right now. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $56,700 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage, you grow your wealth through the forced savings that is your home equity.

Bottom Line

If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face.

 

Connect with Partners Realty to see how you can begin your journey to homeownership today.

Click Here To Get Started! 

 

11 Ways to Winterize Your Home on a Budget

11 Ways to Winterize Your Home on a Budget

Keep the cold out, the heat in, and your energy bill down with these cost-effective tips for winterizing your home.

Clean Your Gutters

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clean gutters before winter

You've heard it before, but we can't stress this enough. Making sure that water can flow freely through your gutters now will help prevent icicles and ice dams from forming later.

Cost: Other than your sweat and time, free.

Photo: istockphoto.com

Flush the Water Heater

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Flush the Water Heater

Particles and sediment can collect over time in the bottom of your water heater, hindering the unit's efficiency. Flush the water through the drain valve to clear out the material and keep your heater functioning at its best.

Cost: 100% free if you do it yourself!

Photo: istockphoto.com

Clockwise Ceiling Fans

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Ceiling Fan Direction

Ceiling fans are everyone's favorite summer budget-saver. But they can help out in the winter as well! Have your ceiling fans move in a clockwise direction so they push hot air along the ceiling towards the floor. If they're going counterclockwise, they won't be as effective.

Cost: free if you have a fan.

Photo: istockphoto.com

Window Insulation Film

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Window Insulation Film

It may not be the most fashionable tip, but window insulation film can keep up to 70% of heat from leaking out of the windows. You won't mind the appearance when you're toasty warm in your house!

Cost: $5 to $15 per kit.

Photo: amazon.com

Draft Guards

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Draft Guards

In a drafty room, heat escapes under the door. When winterizing your house, place draft guards by the doors to prevent heat loss. It's a simple solution that keeps your house warm and saves you from wasting energy.

Cost: $10 to $20 or free if you place a rolled towel at the bottom of the door. 

Photo: amazon.com

Replace Filters

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Replace Filters

Regularly changing the filters in your central air and heating system can significantly improve its efficiency and longevity, while easing the pressure on your wallet.

Cost: $20 to $35 for a pack of filters.

Photo: istockphoto.com

Weatherstrip Tape

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Weatherstripping

Drafts and air leaks increase your heating costs, so make sure your windows and doors are sealed tight with weatherstripping. Simple, easy, and smart.

Cost: $5 to $10 per roll.

Photo: istockphoto.com

Fiberglass Insulation

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Fiberglass Insulation

For maximum heat retention, pack fiberglass insulation around basement doors, windows in unused rooms, and window AC units. Make sure your attic floor is insulated, too. Just remember to be careful and wear gloves!

Cost: around $25 per roll.

Photo: istockphoto.com

Programmable Thermostat

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Programmable Thermostat

The US Department of Energy says you can save as much as 1% on your energy bill for every degree you lower your home's temperature during the winter. Install a programmable thermostat now and save money by keeping the temp down when you're not at home.

Cost: prices vary from basic versions for around $35 to $60 to smart-home options in the $100 to $200 range.

Photo: istockphoto.com

Just Caulk It

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Caulk Gaps

Any remaining gaps in siding, windows, or doors can be filled with caulk. For extra drafty windows and doors, caulk the inside too, pulling off moldings to fill all gaps in the insulation.

Cost: $10 for a caulk gun and less than $5 for a tube of caulk.

Photo: istockphoto.com

Chimney Balloon

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Chimney Balloon

Your chimney is a huge source of heat loss come wintertime. If not in active use, plug it up with a chimney balloon when winterizing your home to keep drafts out and heat in.

Cost: $25 to $60 depending on the size of the balloon.

 

As Boomers Downsize, Competition Grows for Simpler—but Not Always Smaller—Homes

As Boomers Downsize, Competition Grows for Simpler—but Not Always Smaller—Homes

By Julia Carpenter

Wall Street Journal
Nov 1, 2021

Older buyers seeking smaller or easier-to-maintain homes are crashing into younger buyers in a housing market where the competition is fierce.

Soaring home prices and new construction favoring bigger builds have interrupted traditional patterns of homeownership for buyers across the country. Smaller houses, desired by aging seniors and young couples alike, are among the toughest to find. The supply of homes up to 1,400 square feet is near a five-decade low, according to data from Freddie Mac.

In 2020, about 28% of real-estate transactions could be characterized as downsizing, said Lawrence Yun, chief economist at the National Association of Realtors. The majority of these transactions are made by buyers 55 or older.

“We have a housing shortage,” Mr. Yun said. “Clearly from the age patterns, young people want to upsize, and the older generation is looking to downsize, but not greatly—only 100 or 200 square feet smaller than where they’d been living.”

The typical housing cycle for many families—kids go off to school, household sizes shrink, empty-nesters hand off their family homes to new households raising their own children—has been disrupted in recent years, said Len Kiefer, deputy chief economist at the mortgage giant Freddie Mac. The large baby boomer population outnumbers the rising Gen X-ers, who would be the ones to traditionally take over the family homes.

Many boomers want to “age in place,” meaning living in their original home independently into their later years. A 2018 survey of 2,287 adults from the AARP shows seniors would prefer to stay in the communities where they already live.

“They like their grocery store, they like their doctor, they like their local options,” said Karan Kaul, senior research associate at the Urban Institute.

Once they decide to move to a smaller home, they end up competing with first-time buyers and limited supply, Mr. Kiefer said. Price growth has been strongest for smaller, less-expensive homes. “That works against you in terms of what you can get for your buck,” Mr. Kiefer said.

If they haven’t paid off their mortgage, older buyers might find they could sell their current home at a high price but then pay more in mortgage payments on a smaller place. The share of older homeowners with debt has steadily increased over the past decade, rising to 55.4% in 2019 from 33.2% in 2007. This rise is driven in large part by mortgage debt, according to data from the Urban Institute.

After retiring from working at the New York Department of Education for 33 years, Enid Maldonado-Salgado started to make a plan to move from her current home in Flushing, in New York City’s Queens borough, to further east on Long Island, where she and her husband can be closer to family.

The 60-year-old worked with a Realtor for a year before retirement. Ms. Maldonado-Salgado said her goal was to find a home valued at 80% of her current home’s worth. She found the house-hunting process difficult, even with the money she had saved from refinancing her existing home and the substantial profit she expects from selling it.

For Ms. Maldonado-Salgado, downsizing meant finding an affordable home that wouldn’t require too much maintenance or upkeep. She wanted the freedom to travel and to be closer to her grandchildren.

Ms. Maldonado-Salgado is now in the process of closing on a new house in Smithtown. The new house is nearly equal in square footage to her house in Queens.

“It wasn’t about finding something smaller, it was about finding something that benefited my budget,” she said. “We wanted to make things simpler for ourselves.”