Buy VS Rent

Dated: 01/17/2018

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   Image title A question most of us will likely face in our lives is, should I buy or rent a home? Neither option is fundamentally good or bad despite the age-old argument. It is impossible to say one of these options is better than the other because several factors come in to play that are unique to your situation. You must consider where you live, what kind of house you want, how much you can afford to spend on housing, & an endless list of other possible considerations. My goal with this blog is to help you understand the variables & evaluate your own situation.

    For generations, buying a home has been considered a big part of the American dream. However, in recent years, people have begun to debate whether buying is always better than renting. Home-ownership is a long-term financial decision & can be very rewarding, but you must be prepared, know what to expect, & make educated financial decisions. There are great benefits associated with owning your home, including the sense of pride of calling it your own, but buying a house for the sake of owning is not a good idea. If you can’t keep up with the payments or taxes, you could lose it, & end up in financial ruin.

    When you buy a home, you must pay for things you don’t have to pay as a renter. You need to budget for the cost of property taxes, home insurance, loan interest, & an estimated $500 annually for routine maintenance, according to the Census Bureau. There is also potential for scary unforeseen expenses such as replacing an AC system.

    On the other hand, the upgrades, work, & care put into your home can add value to your investment. If the home appreciates more than you’ve paid in mortgage, interest, taxes, & maintenance, you’ve earned a return! Tax credits for money paid towards mortgage interest can also offset some of the cost of ownership.

    In most cases, people rent because buying is too expensive. This all depends on the market in your area. Reports find that 45% of renters in metro areas could afford monthly payments towards a median-priced home. In San Antonio, for 2017, the average residential rental price was $1,440. For that amount a month, you could purchase a $232,000 home with 10% down on a 4% interest rate including taxes & insurance.

    Despite a significant amount of multi-family construction in recent years, the rental vacancy rate hit a 30-year low in 2016. With most new construction at the high-end price, there is a mismatch between the demand for low/moderate-income rental households and rentals in the market. With a significant increase in demand for moderately priced rentals, the supply is now very limited. Meaning, among other things, prices are to keep going up. If renting is expensive in your area, it might be cheaper both monthly & in the long run to buy a home.

    Nevertheless, as millennials move into their late 20’s & early 30’s, the demand and price for both rental properties & entry-level ownership will soar.

    At the end of the day, sometimes it’s smarter to buy and other times renting can work in your favor. The best way to find out what works for you is to do your research, crunch the numbers, then do what feels right. 

    To see how much home you can afford, I have included a link to the Home Affordability calculator offered by REALTOR.com

https://www.realtor.com/mortgage/tools/affordability-calculator/#iid=finance:nav_menu:afford_calculator

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