REAL ESTATE TOPICS...renters are taking the plunge into homeownership

By Bill Lewis

As monthly rent payments and home prices inch higher, many renters are taking the plunge into homeownership.

A one-two punch of ever-higher monthly rent payments and rising home prices is convincing many renters that now is the right time to buy a home.

“We are in the perfect market to buy a home. Rents are high and you can get into a home for less,” said Christie Wilson, managing broker of the Wilson Group Real Estate Services.

That’s what Ja'Mesha and Markà Manning discovered when their landlord told them their apartment rent was about to go up $150 a month to $950.

“It would have eaten into the budget,” said Ja'Mesha Manning.

They purchased a home in Old Hickory Commons, a neighborhood developed by Ole South close to Cain Ridge High School in Antioch. The mortgage payment on their 1,175-square-foot townhome is less than they paid to rent an 800-square-foot apartment.

“It was cheaper to own than to rent, and we have pride in ownership,” she said.

'A bigger check every month'

The Mannings' experience is not unique, said Trey Lewis, vice president of Ole South.

“The cost of renting is outpacing the cost of ownership. There’s no price protection for renting. You have to write a bigger check every month,” he said.

The average apartment rent in Nashville was $1,395 in July. Rents increased $100 per month in the first half of the year, according to rentjungle.com, which tracks markets across the country.

Rising home prices are another factor motivating renters to become buyers. Buying now, before the prices go higher, saves them money, said Wilson Group Realtor Libby Bruno.

“The cost of waiting, when home values are rising anywhere between $19,000 and $25,000 a year, makes buying now an even more timely decision for many of my clients,” said Bruno.

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Building equity

The median price of a home in the Nashville region was $267,000 in July. It was $234,900 in July 2015. Someone who purchased a home a year ago would have paid $32,100 less. And, as their home increased in value, they would have built up equity.

“Rising rents are probably one of the biggest factors among my clients. They either have lived and rented here for a long time and have seen their rents skyrocket in recent years, or they have moved here from out of state and are excited to buy and take advantage of the growth that Nashville is experiencing every day,” said Bruno.

“That means money on their investment instead of flushing rental dollars down the drain month after month, reducing their ability to further their future,” she said.

People rent for a variety of reasons, said Wilson. Some have never owned a home. Others rent briefly after moving to Nashville. Occasionally, someone sells a house faster than expected and has to become a renter while looking for something to buy. Still others lost their homes in the recession.

“During the recession, many people had to sell their homes. A lot of them are renting until their credit is cleaned up," said Wilson.

Pride of homeownership

During the downturn, Realtor Stephanie Lowe was busy helping clients find rental housing. Most of them bought a home as soon as they could.

“Most of them rent and save until they can afford the down payment. Once they meet with their lender and realize how much they will be saving on a monthly basis, they are astonished,” said Lowe, who is an agent with the Wilson Group.

When they purchased their townhome, the Mannings participated in the Tennessee Housing Development Agency’s (THDA) Great Choice program. The agency, whose mission is to help make homeownership affordable, offers qualified buyers assistance making down payments of up to 4 percent of their mortgage loan.

There are income limits, and participants are required to complete a homebuyer education course that prepares them for the difference between renting and owning.

One of the greatest differences is pride and a sense of independence, said Ja'Mesha Manning.

“If something goes wrong in an apartment, you nonchalantly call maintenance,” she said. “In a house, you have to pay. So you have pride in ownership.”