The other day I was reviewing the rentals in my Laurel, Md. real estate market for a client. At first, we looked at potential sales in a particular neighborhood. The type of home she wanted was listed anywhere from $256K to $429K. This is a huge price range in the same neighborhood.
My client was amazed at the prices. Then she asked me to look at what homes were renting for in the area. I did this rental search and found a home that was renting for $1900 a month. She suddenly became very excited and wanted to look at this home located close to Laurel MD in Silver Spring MD.
I was surprised at her reaction. I explained to her that if she could afford a $1900 month rental, she could afford a mortgage of $280K. She didn’t realize that. Not only that, but because of the tax deduction, a $1900 mortgage payment is actually about $300 less than a $1900 rental payment.
It appears the housing maket has now caught up to the rental market. Buyers need to be aware of this change. Many people in the Laurel Md area, think they can rent for less than what they would pay in a mortgage. This may not be true anymore. A buyer needs to check rental payments as compared to mortgage payments.