Home for Rent
Real estate had been in a constant state of decline, but the last couple of years it has been making a very slow rebound. With the changes in the market, home values, and interest rates many are wondering if it is the right time to purchase their own home. Others still hold with the general idea that renting is always cheaper, but not always better, than owning. In 2006, home ownership was at about 70% among Americans according to the US Census Bureau. Earlier this year, that number has dropped to around 65%. This is an indication that the home values remain depressed in most markets. Lower than normal interest rates for mortgages have made buying a home a lot more attractive. Financial considerations are a primary part of choosing whether to rent or buy a home.
Buying has Become Cheaper
The changes in the real estate market over the last few years have made it less expensive to purchase a home than to rent one. As a general rule, property appraisals have shown that homes are not worth as much as they were a few years ago before the real estate bubble burst. For those who desire to stay in one place for the next few years, it can be a very good deal to buy instead of rent. According to preliminary analysis most individuals who purchase a home in the present market can reach their “breakeven point” in as little as three years or less. With the interest rates and home prices sitting at historic lows, purchasing a home is becoming a better option. When this analysis was performed by a reputable company, they took into account all of the costs that are involved when purchasing a home. They included down payments, mortgage payments, and maintenance costs, closing costs, property taxes and utilities when they compared buying with renting. They also took into account the home’s projected appreciation as well as probable increases in the cost of renting. With rent hitting all time highs, mortgage rates and home prices hitting all time lows, home ownership has become far less expensive than renting.
Other Considerations
There are things other than finances to be considered when trying to choose between renting and owning. Homeowners have the responsibility to maintain their own properties. That means that they may need to do their own lawn work; or perform minor repairs to the home. It may also mean that they need to be able to pay for professionals who can handle the jobs that they cannot do themselves. This includes plumbers, carpenters or electricians. However, renters enjoy the luxury of not having to worry about maintenance at all. They do not have to worry about things like which plumber or carpenter to call. Nor do they have to hire a property appraiser at any time.
Another consideration is mobility. If you are certain that your job is secure and there will be no reason you may need to move to another area, it may be the time to consider making a purchase as long as it can be afforded. Those who think that they may need to move due to a job situation or educational needs in the next 3 to 5 years, should probably wait to purchase and enjoy the mobility that is afforded renters.
Which is right for your situation?
There is no clear cut answer for any person’s situation. But there are a few questions that you can ask yourself to find out if it is better for you to rent or own. Think about how comfortable you are with current life circumstances and how stable your income is. Do you think you will need to move to another location in the next 5 years? This can be for work, personal or educational purposes. If you are comfortable with your income level and relatively sure in your present job and are certain you will not need to move, buying may be the better option. However, it is always a good idea to consult with a financial advisor before making large financial investments of any kind.
