Kitsy Roberts and Janko Williams have traded a rent payment for a mortgage. The Seattle couple is planning to put a lot of sweat equity into their fixer-upper.
Kitsy Roberts and Janko Williams have traded a rent payment for a mortgage. The Seattle couple is planning to put a lot of sweat equity into their fixer-upper. Wendy Kaufman/NPR
In many American communities, buying a home is now less expensive than renting. And with the economics tilting in favor of homeownership, many first-time buyers are jumping into the market.
After eight years of renting, Kitsy Roberts and her husband, Janko Williams, are practically giddy about their new Seattle home. And like proud parents, they are eager to show it off, from its historic details to its fresh paint.
The living room of their 1920s bungalow in the city's Central District features a lovely Craftsman-style fireplace and high ceilings. But the house also came adorned with chartreuse carpeting and kitchen cabinets of faux pink marble.
Roberts and Williams moved in about a month ago; they've been feverishly fixing and renovating ever since. They're scraping away layers and layers of paint and wallpaper, filling in cracks and replastering. Pointing to the old and not very efficient windows, Roberts sighs and says, "We will probably need to replace these at some point."
People buy homes, especially first homes, for lots of reasons. They want more space, a backyard, a sense of privacy and security.
And until the housing bubble burst, homeownership was widely viewed as a good investment.
Today, buying a house may once again look like a sound financial option, at least in many parts of the country where markets have stabilized, mortgage interest rates are extremely low, and rents are moving sharply higher.
"If you are in a stable place and you have the financial ability ... it's kind of the perfect time to purchase a home," says Kim Colaprete, part of Team Diva real estate at Coldwell Banker Bain. She helped Roberts and Williams buy their house.
The couple — both of them are in their early 30s — had been thinking about taking the plunge into homeownership but hadn't gotten serious. Then they watched as a house in their favorite neighborhood sold in just a couple of days — and for substantially more than the asking price.
"I mean, that was sort of it — that one house," Roberts says.
"We're going to miss our chance," Williams recalls thinking. They set out to find a real estate agent, and a house of their own.
Their new home cost $350,000. Their monthly payment is $1,680, including taxes and insurance. That's about $250 more than their rent. But they'll get some of that back when they deduct the mortgage interest on their tax return.
"It beats paying rent," Roberts says. "You're paying for a roof over your head. But after that, you're paying into nothing."
Colaprete says she hears the same thing from most of her first-time buyers: They are sick of paying rent, especially since rents have been rising.
They say, " 'This is ridiculous, I can buy something with an interest rate of 3.35, or 3.5 [percent]. Why am I paying someone else to have an investment when I can have my own investment?' "
Stan Humphries, the chief economist for Zillow, an online source of real estate and related data, says, "The overwhelming factor in any buy/rent consideration is the time horizon itself: How long are you going to be in that house?"
If you are going to be in a house for 20 years, you want to buy the house, he says. "And conversely, if you're only going to be in the house for one year, you're going to want to rent that house, because you won't be able to make up for the transactional cost."
Those transaction costs — such as closing costs and commissions — can be thousands of dollars.
Historically, Humphries says, the so-called break-even point when buying becomes a better financial proposition than renting has been about four to five years in many markets. Today, he says, in lots of places it's less than three years.
Still, there are challenges for many would-be homebuyers. Obtaining a loan can be difficult. And in places like Seattle, there's a shortage of homes on the market — so there isn't much to choose from.
But Kitsy Roberts found what she was looking for: a cute house in the right neighborhood, for the right price.
"This is pretty neat," she says. "It's all ours."