The Rent vs Buy Debate and Real Numbers
It's a bit surprising that even in today's housing market of high inventory (lots of houses for sale), low prices and low interest rates that the rent vs buy debate is even a talking point. But buying a home isn't the answer for everyone, so it does make sense that some people still ask, "Is it better for me to rent or buy a house?" Of course, the answer isn't a simple one for many folks.
Sometimes the housing question comes down to location. In some markets, it's much more cost effective to buy than to rent. Other times it's a matter of credit score and financial situations for the person. Maybe your savings is too low and your credit score needs some work. Renting might be the way to go for awhile as you get your credit mortgage-ready.
All that aside, renting is typically seen as a less desirable situation than owning your own home. In fact, an article from real estate blog Trulia says buying is 45% cheaper than renting. Check out this excerpt:
...asking home prices have started to rebound and have risen by 2.3% year over year in August (3.8% excluding foreclosures); however, rents have risen more (4.7%). This means that prices are lower relative to rents than they were a year ago. But more importantly, mortgage rates have fallen: the best rates this summer have been around 3.5%, while last summer rates were closer to 4.5%. Based on asking prices and rents during the summer of 2012, buying is now 45% cheaper than renting in the 100 largest U.S. metros, on average – that’s a savings of $771 a month. If you plan to stay in a home for 7 years, which is the average time that Americans traditionally live in a home before moving again, it is more affordable to buy than to rent in ALL of the 100 largest metros in the U.S.
Here's an interesting table on the benefits to owning over renting in some specific markets, including several in the AmeriFirst Home Mortgage service area.
Sometimes the rent vs buy housing debate doesn't come down to numbers. Sometimes it comes down to an individual's situation. Maybe the neighbors above your apartment are raising a herd of elephants. Maybe these elephants enjoy dancing in Riverdance. And maybe these dancing elephants only wear wooden shoes from Holland, Michigan.
Another reason to mark a big plus in the "own your own home" category of the rent vs buy housing debate: awkward neighbors who love their Speedo in thong mode.
So whether it's real numbers that help you decide if you'll rent for awhile or if it's time to buy your own home, or it's the annoying neighbors, the answer in the rent vs buy debate really comes down to you. Young professionals contemplate rent vs buy debate in housing and come up with their own answers based on jobs and other issues. At the end of the day, it's up to you. Just make sure you're considering all your options and pros & cons of each side of the debate.
When it does become time to buy your own home, make sure you're prepared. Download "The Essential Guide to Buying Your First Home" at the button below. The guide will help you understand the home buying process from the lender's point of view. We want you to understand the mortgage process so you're a more powerful buyer. From your FICO score to the down payment, the more you know the better deal you can get on your first home. Here's a look at what you'll learn about in this guide:
- FICO scores and how they affect your mortgage
- Down payments and cash-to-close
- Mortgage options for first time home buyers
Get your copy at the button below.