Median Incomes Do Not Support Median Home Prices: Umbrella Real Estate Can Help You Find Rental Home
When you rent, most people mistakenly assume the decision is made out of necessity
, not rationality. But there is a very good reason to rent in today's recession-stricken market: median incomes do not support median home prices.The problem is not just the recession. The home prices that we are seeing today fluctuate or rise according to factors in the recession. Because of this, home prices have deviated from the fundamental formula that has always ruled the Philippine real estate market. Median home prices increased by nearly 50 percent in the last decade. On the other hand, the median income has only gone up 10 percent in the last ten years - a very meager increase compared to the change in home prices.
Incomes simply cannot support the recession-inflated prices. Filipinos earning the median income have no chance of reasonably affording a median priced home with a conventional home loan.
In the past 5 boom years many borrowers did not take out conventional financing to purchase their home. Instead, they got caught up in the housing frenzy and took out ultra-risky and sub-prime mortgages just to get into the market. The result has been many foreclosures and a partial meltdown of the lending industry. Now over 100 major and rural banks have imploded since late 2006. Thus, these banks have tightened their lending standards and drastically cut the pool of bona fide buyers.
Major overhaul is needed. Optimists like to argue that the correction will not be national, but will instead be limited to the most overpriced areas. While it is true that the most overpriced cities are likely to see the largest declines in prices, this is not the way to contain the problem, and not to mention the fact that nearly one million jobs lost since the recession began. This is occurring everywhere, not just the largest cities.
Umbrella Real Estate can still help you find a home. Umbrella Real Estate realistically knows that real estate is a good long-term investment. Unlike countries like Japan and the United States, the Philippines always has been able to cope and adjust to any recession thrown at it. Although real home and property sales are still slow in rising, rentals has seen a sudden surge in real estate for the simple reason that home rentals is still within reach of the average Filipino median income.
Umbrella Real Estate can help you save money. Renting a home you are comfortable living in for a few years will enable you buy a house later once the recession settles down and Philippine real estate picks up again. So, it may be safe to say that home rental is a better option for some families. It holds true especially in these trying times when every amount of money spent has to be wisely considered.
Umbrella Real Estate is fast becoming the Philippines' most recognizable name in Philippine real estate, attracting hundreds of buyers every month. Our vast listings of Manila homes, Manila condominiums, Manila property and even Manila rentals gives us a high edge in property searching.
Our style of brokerage is completely unique and original. Everything is designed to give you better service. This has catapulted us as one of the top brokerages in the Philippines in the 21st Century.
If you are interested in renting a home, please visit us online at www.umbrellaonline.com or you can call us direct at (02) 889 1817.
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