St. Thomas / Virgin Islands Blogs

http://finance.yahoo.com/blogs/daily-ticker/buying-beats-renting-most-u-...

Renting versus buying: the age-old question that has confounded homebuyers in recent years.

Depressed home prices and historically low mortgage rates have done little to persuade the majority of Americans to buy the more than 2.5 million homes available for sale last month. Homebuilders have cut back on construction but a glut of accessible homes has stymied a complete housing recovery.

New home sales tumbled 8.4 percent in June from May to a seasonally adjusted annual rate of 350,000 according to the Commerce Department. June's number makes it the biggest one-month drop since February 2011. Sales of existing homes in June fell to their lowest level since October but increased 4.5 percent compared to the same period last year. Housing sales in 2012 are well below the 700,000 seasonal rate needed to support a healthy housing market.

General economic uncertainty and falling home prices have fomented a wait and see attitude with potential buyers, but there are many instances where owning a home has a significant advantage over renting, according to Stan Humphries, chief economist at real estate Web site Zillow. A new report by Zillow found that buying a home beats renting in three quarters of major U.S. metros if a homeowner lives in that home for at least three years. In some of the hardest hit cities — Miami, Phoenix, Orlando, Tampa and Las Vegas — homebuyers can recoup their investment in less than two years.

Zillow analyzed 200 U.S. metros and 7,500 cities to determine on average how long it would take for homeowners to break even, incorporating all possible costs associated with buying: down payment, mortgage and rental payments, transaction costs, property taxes, utilities, maintenance costs, tax deductions and opportunity costs, including inflation and forecasted home value and rental price appreciation. The Miami/Fort Lauderdale region was found to be the best deal on the market since it would take homeowners just 1.6 years to recover their expenses. Homeowners in the San Jose metro and in Mill Valley, Calif — a community north of San Francisco — would not break even for at least eight years.

Humphries says the study dispels the longstanding real estate rule of thumb that owning a home only makes financial sense if one were to live in that home for at least five years. Today's economic conditions for buying a home have never been better, he argues, even for short-term buyers.

"Nationally home prices are back to early 2004 levels," he says in the attached clip, "paired with mortgage rates which are better than they have been in the past 40 years. Affordability is through the roof."

Humphries believes home prices have bottomed nationally and says home values will grow one percent over the next year.

I was lucky enough to be able to testify at the Virgin Islands Legislature's Economic Forum, specifically with regard to Hotel Tax. If you have rented in the Virgin Islands, you may or may not have had to pay a hotel tax, depending upon whether the owner or manager of the property is properly adhering to the law.

See this excellent article from the Virgin Islands Source and reposted on our website:

http://stthomasre.com/st-thomas-virgin-islands-news/millions-in-vi-hotel...

If you are a vacation guest and looking to avoid such tax, it does happen. But hopefully the VI government will go after these delinquents. The territory is in a very poor economic condition, and if we cannot collect on taxes that are legally owed, then we will never be able to get out of this hole. So I encourage and beg tourists to work with reputable companies that not only collect the tax, but also pay it to the Government.

Buyers seem to have a lot going for them right now:

* Home prices are still very low

* There are still desperate sellers out there, offering steep discounts for homes already priced below market

* Interest rates are at record lows

For those that have been sitting on the sidelines, waiting for the right moment, it really doesn't get any better than this.

Call REAL SOLUTIONS REAL ESTATE AND MANAGEMENT SERVICES to find out how we can help you capitalize on this historical moment in time.

I used to live on a sailboat. Not briefly, I am talking about a period of nearly ten years. It sure is a different lifestyle, and at this point, I have grown very accustomed to being a land dweller. But I also admit a slight addiction to YACHTWORLD and dreams of owning a larger sailboat again at some point in my life.