Rent Rate Hikes Steers Tenants To Homeownership
(CBS DETROIT) — It's one of the biggest financial decisions you can make that contributes to personal and community stability.
Becoming a homeowner comes with a lot of responsibilities but it also comes with many rewards.
Terance Bowers of Bowers Realty says homeownership gives you more financial leverage over renting.
"The inventory is really low so you're dealing with a lot of different renters looking at the same type of properties, ok so, even of you seen a property that's affordable you'll probably be 20 out of 30 people waiting in line," Bowers said.
As rent rates increase in Detroit, tenants are starting to seriously consider terminating their lease for a home loan.
"Let's say if you get a starter home theoretically for $100,000 in an area where properties are selling for $150,000 so when you put in let's s say $5,000 or $10,000 you will see that back if you resale it on the market," Bowers explained.
The Detroit Housing Counseling and Homeownership Project shows the median household income at $30,894 a year.
According to rent.com, the average rate for a one bedroom apartment in Detroit runs for roughly $1,200.
That means the average tenant in the city spends almost 50% of their income on rent.
Bowers says you could possibly save hundreds monthly by investing in a $100,000 starter home with a five percent interest rate.
"You would be looking at about $1,000 or $900 a month depending upon what type of interest rate you can get now the higher your credit is and the better the income, through different systems you'll be able to get better interest rates," Bowers said.
Michigan State Housing Development Authority offers down payment assistance programs for first time home buyers.
Visit here for more information.
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