That is the question. With the current national real estate market in a downturn, Westsiders are wondering if renting might be a better option than buying.
One factor in making a decision is how easily a buyer can get a loan. Consider how much money exists for a down payment. Even with good credit, lenders are still nervous. Except in rare situations, five percent down won’t get a loan approved anymore. If a comfortable down payment isn’t a problem, then buying on the Westside is still a sound investment.
Better deals are often achieved when potential buyers are preapproved for a loan by a reputable lender. This process helps clarify to the buyer what his comfortable purchase price is. It also demonstrates to the seller that the buyer has a sincere motivation to purchase and the ability to close escrow. Showing a loan pre-approval letter first often results in a discount in purchase price.
Another way for buyers to get the best possible deal is to utilize the expertise of an experienced agent. He or she can isolate situations in which sellers might need a quicker sale and thus don’t have the luxury of waiting for top dollar.
Smart buyers act quickly to take advantage of a deal and don’t waste time over details inconsequential to the sale. Recently, I witnessed a buyer lose a property haggling over minor issues. The home sold to someone else for a higher price because that buyer moved fast without unnecessary and time-consuming negotiations.
What does all of this say about renting? Inventory and activity are up from last year. However, Westside rent prices have also risen by as much as 41percent for May of 2008 compared to May of 2007. The tighter lending standards resulting from the mortgage crisis translated into fewer qualified buyers, and the influx of renters caused rent prices to increase.
So the answer to whether one should buy or rent really comes down to an ability to obtain a loan and afford monthly mortgage payments. Buying real estate, especially on the Westside, is still a healthy, sound and ultimately profitable investment.
Ben Lee is a Westside realtor with Coldwell Banker and a licensed attorney. For questions or comments, e-mail ben@benleeproperties.com
