What is Better in the Current Housing Market Rent vs Buy?
Potential first time home buyers continually ponder the question of rent vs buy. The answer is always the same: buying beats renting every time. There are so many advantages to buying over renting, that no matter what the current market situation might be, it still always makes sense to own property rather than renting.
Financial Tax Benefits
One of the greatest advantages in purchasing a home are the tax incentives. Since the interest paid on the mortgage is tax deductible, this not only makes owning a home much more affordable, but it could actually cost less than renting. These interest tax deductions go all the way up to $1 million and apply to all homes.
In addition to mortgage interest, other tax deduction incentives where purchasing wins the rent vs buy question can include:
- Interest paid on other debt used for home security, for example, for home equity loans.
- Amounts paid for points to reduce mortgage interest rates or other loans linked to the home.
From a tax standpoint, once again, buying is ahead in the rent vs buy equation.
Privacy and Other Factors
Anyone who has lived in an apartment understands what it is like to have their sleep disturbed or deal with unruly and disrespectful tenants - it can be a real renters nightmare. Homeowners still have neighbors, however, there is a much stronger barrier and you are not surrounded on all four walls by other people. Even house renting rules include things that never apply to home owners. For example, house renters are stuck with whatever the decor happens to be. Rarely is any form of renovation allowed. In fact, just like apartment renting, any holes made in walls from personalizing the space with pictures must be filled in order to even qualify to get a security deposit back. These are yet more reasons where purchasing a new home wins in the rent vs buy equation.
High Rent Districts
Rents have been raised so high in metropolitan areas that they can exceed the cost of a mortgage for larger spaces. In a market where home prices are lower, this situation is especially prevalent. It is estimated that consistently in 99% of all housing markets, purchasing a home is less costly than renting. At times when property prices are lower, that already high statistic is raised to 100%, especially with low level mortgage rates. Despite those facts, rents always continue to rise in every market. Here again, buying trumps the the rent vs buy question.
Check out "The Essential Guide to Buying Your First Home" at the button below. The free guide walks you through the buying process so you can be an educated, powerful buyer.