Although the housing market shows favorable signs of recovering, a definite instability still exists that is causing home buyers to remain cautious about purchasing a home. However, real estate activity charts focusing on New Jersey’s housing market indicates that the rental aspect of the real estate industry is booming. Experts attribute the strength of the rental market to definite shifts in job opportunities and demographics subtly transforming the landscape of the Garden State.
Home ownership in New Jersey was at 66 percent in 2011, slightly below the average of the percentage of people in the U.S. owning their own home. This means nearly 40 percent of Jersey resident have chosen to rent a place to live rather than take on a mortgage. Because paying a monthly mortgage bill on time depends on permanent, steady employment, many recession-weary people are waiting until the job market improves before taking the plunge into home ownership.
With real estate companies experiencing a strong demand for rental properties, landlords are afforded the option of charging higher than normal rates. Market analysts expect rents to increase by as much as 10 percent in the next few years. When combining this probable forecast with record low processing rates of loan applications to purchase new homes, it is safe to say that there has never been a better time than now to purchase a home in New Jersey.
In fact, the percentage of New Jersey’s first-time home buyers rose to nearly 53 percent in 2009, up from 48 percent in 2008. Encouraged by the $8000 federal tax credit, low interest rates on loans and overall affordability, home buyers are taking advantage of reduced prices due to the current renting spike. Additionally, Garden State homes represent one of the best real estate investments in the U.S., with an appreciation rate almost six times higher than the national average.
Waiting to purchase a home because you think real estate prices will drop even further may cost you more money in mortgage payments, interest and principal. For example, someone who is approved for a $300,000, 30 year mortgage at five percent interest will owe monthly payments of nearly $1600. If the average price of a New Jersey home decreases five percent, this same buyer is at risk for suffering the financial consequences of an increase interest rate. Even a one percent interest rate hike will equal thousands of dollars in extra principals, interest and regular payment costs over the course of paying off a mortgage.
Further benefits of owning New Jersey real estate are revealed in statistics reported by the National Association of Realtors. Garden State home buyers who bought homes several years ago now possess $80,000 in home equity, also above the national U.S. average. This information, along with the high demand for rental property, provides a home buying environment optimal for people interested in taking advantage of the current low prices and loan rates. Contact a professional real estate company like Orly Chen to discover how easy and affordable it is to own your home in the beautiful state of New Jersey.