A recent married couple I know have been house hunting for six months now. They have used the same real estate agent and broker in the process and looked in over four cities to find their ideal house that they dream to start a family in. Although six months is not entirely lengthy, the reason it has taken months is not because they are picky, but because they keep being rejected. As they are looking for housing in California, they are struggling to make serious offers as most couples are paying with cash or offering way more money than the asking price. Meaning, it’s not that they aren’t going in at terrible offers, it’s that people have way more money and assets that they do so they are running into issues.
And that’s just one example. It’s the same thing for people looking for apartments in big cities. The pandemic saw a lot of growth in cities that used to have mostly local populations. Unsurprisingly, when more people move to a city that used to be desolate, the cost of rent rises. That’s exactly what’s happening in Chicago, Austin, Detroit, New York City, and San Francisco, big cities that have seen a lot of transplant growth. The competitive marking is driving prices and making the days of affordable rentals vanish. In fact, when I first moved to NYC in 2017, the room I rented in a new Bushwick, Brooklyn never-been-lived-in three bedroom apartment was $825. That same room, now five years later, is $1495 — just a huge increase and I believe we have the pandemic to blame.
It’s actually making people question whether or not they want to actually buy a home. And it’s not just the price you see listed on a website or a for-sale sign, you also have to think about the security deposit, broker’s fee, first and last month’s rent. This is why people have been more interested in renting short-term rentals where the lease is flexible in case it isn’t totally what you hoped for. That way you won’t have to cough up your entire life’s savings and you live in an area that is affordable to you. Plus, you can save for your future house while living in a short term rental. Short term leases start anywhere from three months to 18 months to mainly provide consumers with flexibility.
If your home ownership plans are a go, here’s some financial terms you need to know.