MYRTLE BEACH, SC (WMBF) - Experts are watching rent prices increase, and say the trend is only expected to continue.
It's a simple, but pricey, necessity – a roof over your head. But if you're renting, some local experts say it's very likely that you are throwing money away.
In Horry County, the median household income is about $43,000. Financial experts recommend you never pay more than 30 percent on housing. If you do the math, you shouldn't be spending more than $1,075 on rent. But in Horry County, the average cost of rent is $1,200.
"It's not one of those things you can decide to cut out. It's housing. You have to have it," says Justin Thompson with Elliot CoastalLiving.
Thompson says the Grand Strand has a slim middle class, like most of the U.S. today. And this causes a lot of turmoil in the housing market when it comes to rental prices and home sales.
Experts are watching rent prices go up every year. And that trend is only expected to continue in 2015. It used to be easy to rent in the Grand Strand. This is considered a seasonal area with lots of seasonal workers, vacationers, and retirees. Up until this point, there were not many up-front costs, commitments, or fees in order to make renting easier. But as the demand for rentals went up, so did the price and the fees. Now you could pay anywhere from $2,000 to $3,000 up front before moving into your rental.
Rent in many complexes in the Grand Strand is going up by nearly $100 this year. So as the housing market is stabilizing, purchasing is now becoming easier and a smarter investment.
"You can decide you don't want HBO. You can decide you don't have to have high-speed internet. Unfortunately, one of the major things is food and a roof over your head. When it comes to a roof over your head, you're kind of stuck with a big choice. One of which, do I want to go out and make a huge commitment to buy a house, or am I going to continue to stick myself with a rent that's never stable, always changes, and I can't ever count on anything?" says Thompson.
South Carolina Realtors predict 2015 is going to be the year for the first-time homebuyer for a few reason. With rent on a steep rise, it's creating a demand. In turn, construction is booming. Also, lenders are loosening up their criteria to get a loan.
Here are a few loan options to consider:
-The USDA loan is a government-backed loan with absolutely no down payment. This loan is restricted by geography. Anything west of 31, on 501 towards Conway, or out on Highway 90 would qualify.
-The FHA loan requires as little as 3 percent to 5 percent down and allows you to live within the city limits. It has an income limit of around $70,000.
-The VA loan caters to any baby boomers or retirees with VA benefits. This is 100 percent covered and does not require anything up front. This loan will also cover construction loans and will not require any mortgage insurance.
-The "My community mortgage" is for first-time homebuyers or for anyone who hasn't purchased a home in past three years. It does not require anything down and has a lesser mortgage insurance rate. This loan does have some income restrictions.
"Up until this point, [Myrtle Beach] has been such a transient area. People come here, they vacation here, it's looked at more of a secondary life style. That's changing now, because I think people are seeing that even if people do change to switch roots and go over into homeownership, they can sell their home, get their money back out of it, and it's a much more financially stable situation, rather than renting at 100 percent loss," says Thompson.
But mortgage brokers want to be clear, homeownership is not always for everyone. If you don't plan on living in the area very long, by all means, don't buy a home. But Richard Perzo with Atlantic Bay Mortgage says if you're going to live in the Grand Strand or Pee Dee for at least three years, owning will save you thousands in the end.
If you think you want to make the change from renting to buying, find a mortgage broker and find a realtor. They'll lay out all your options and financial obligations so you'll know exactly how much is doable for you and how much you could save.