A word for renters considering homeownership


This season has been marked by a noteworthy number of renters who are ready to be first-time home buyers. Why? The cost of rent is rising. One of our clients reported a rent increase of $1000 per month starting in January, from $1600 to $2600. Combine that lack of security and stability with interest rates as low as they are and it’s easy to understand why many renters have decided to start keeping a more active eye on homes for sale.

Another reason more renters might be looking to buy is low-interest rates and the prospect of those interest rates rising the not-too-distant future. I like to remind my clients that for every 1% interest rates rise, they lose 10% of their buying power. For example, if you qualify for a $400,000 home with a 3% interest rate, you’ll only qualify for a $360,000 home if the interest rate rises to 4%. With interest rates expected to rise, it will behoove renters to secure a mortgage soon with current, late-2021 interest rates.

In addition to interest rates, home values are expected to rise in 2022. Lately I’ve been thinking back to November 2020, when I had clients decide to put their home search on hold until after the holidays. What happened in January 2021 was unprecedented: We saw home prices jump $50,000 over the course of a few weeks. The frenzy of escalation clauses and waived inspections was unlike anything many real estate agents or their clients had ever experienced. With home values expected to rise again, I encourage any renter thinking about buying to start the hunt now.

So how can a renter get ready to buy a home? The first step is to secure the funds for a down payment. It’s common to think that you have to have a large sum, and it’s true that at least 20% is helpful in this market. There are options out there for folks who may not have had the opportunity to save a lump or inherit funds.

Down payment assistance through the Washington State Housing Finance Commission (WSHFC) is available through multiple avenues. And Veterans Association programs can help new buyers compete even with 0% down.

Another option is made possible by Home Partners of America (HPA). This is essentially a rent-to-own program where HPA supplies the cash and acts as the buyer of a home you select. HPA then serves as your landlord while you make rent payments and decide if you want to buy the home.

I’ll be diving deeper into the 2022 forecast in my next column, but I can say with confidence that renters who have any inclination to buy should start shopping now. No matter how you secure it, your down payment will go further in the next few months than it will this time next year.

My team and I would love to help you find that home. Call or write to me at 360-508-2800 or kwoodford@kw.com to start the conversation!

Kristy Woodford is CEO of Holistic Home Group, which is affiliated with Keller Williams South Sound. She has over ten years of experience as a broker of residential real estate in Thurston County and leads a team of realtors experienced in serving local buyers and sellers.


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