I'm so over renting in Birmingham and this is why you should be too.
So after working in property management for years and being a long-time renter, I'm here to say that renting in Birmingham, Alabama is not all it's cracked up to be. As a typical millennial, I've always been of the opinion that owning your own home is overrated. I believed it would lock me into one location on this great big planet and it would ultimately cost me just as much as renting. But I'm here to tell you... boy was I wrong. Now the decision of renting versus buying is for each person to make himself but today I'll share a few points that helped sway me to the dark side.
- Inflation Hedge- So let's say inflation is rising and everything is getting more and more expensive. Well if you're a renter, that includes your rental rate. But if you're a homeowner with a fixed-rate mortgage, you're good to go. Your monthly payment remains the same and all you have to do is figure out how to afford the rising cost of everything else. Home sweet home.
- Rental Rates Rising- Speaking of rising rental rates. Rents in Birmingham, Alabama and nationwide are rising. It's an investor's dream. But not a renter's. If you think $1,200 for your two bedroom in Hoover is high now, just wait until next year and the year after that and the year after that. Rental rates aren't affected in the same way home prices are. Have you ever heard anyone ask if it's a Landlord's Market or a Renter's Market? No, and that's because it's pretty much always a Landlord's Market.
- Equity- This one is a no-brainer. When you purchase a home, you're making an investment. You may have never considered yourself an investor but sure enough you are. Each payment you make builds your equity in that home. If your loan is for $200,000, and the market value of your home is $250,000; you've already got $50,000 in equity. This is the biggest perk of them all. And if you ever need to cash in on that investment, you can sell the home or get a home equity loan.
- Tax Benefits- Turns out homeowners get special treatments when they file their taxes. Yeah, they get to deduct things like mortgage points, mortgage interest, property taxes and profit from selling the house. This can make a big difference at the end of the year. What tax benefits do renters get? Exactly.
- Freedom- The coolest benefit of owning a home. You can do whatever you want. Well almost anything. Paint the walls hot pink, get a 300 pound dog and landscape your backyard around your prized set of regulation cornhole boards. And to add to your freedom, you're not really tied down. If you want to move, just move. It may not happen overnight but a house can be sold for the right price in any market and if selling it isn't an option for you, rent it and use the rental income to pay the mortgage.
- Buyer's Market- Here in Birmingham, we're experiencing a Buyer's Market. Just like it sounds, this means homebuyers generally have the advantage. There are plenty of resell homes on the market and so sellers may cater to buyers requests in order to sell their houses quicker. Now don't go making crazy demands because a seller usually has to collect a certain price. But the numbers are nothing to be ignored. According to ACRE's Q1 Residential Report, the Alabama Statewide Inventory-to-Sales Ratio was 9.2. This ratio is simply the inventory (number of homes on the market) divided by the monthly sales volume. There you have the number of months' supply. You'll find a Buyer's Market anytime the ratio is greater than seven months so a Buyer's Market we have. Perfect time to get in on the home-owning action.