The answer to the age-old question of whether you should rent or buy a home has taken on plenty of twists and turns in today’s dynamic market. Even market experts provide conflicting advice.Take a look at some of the most recent information worth looking into.
- Trulia reported in the second quarter of this year that it is still cheaper to buy than rent in the country’s top metros. But the gains of buying are getting thinner compared to a few years ago, as home prices continue to rise while rents have been declining after significant increases in 2013 to 2016.
- The 2017 Rental Affordability Report from Attom Data Solutions concludes that it’s cheaper to buy than rent in 66% of the housing markets in the United States.
- A March 2017 study by NerdWallet concludes that buying is more expensive than renting in all 50 states, with the cost of owning higher by 54% on average.
The fact is, there’s no one right answer for everyone. The decision to rent or buy greatly depends on both financial and non-financial factors. These include your lifestyle, where you want to live, the size of your family, and others.
Here are some of the things to weigh when choosing between renting and buying:
- How long do you plan to stay in the home?
The rule of thumb is, if you plan to stay in the same home for 5 years or more, then buying is the better option. As the cost of buying is spread out over a longer period, the yearly figure will come out lower compared to the static or increasing cost of renting.
Zillow’s Breakeven Horizon report shows how long it will take (on average) for buying to be considered more financially viable than renting. The report considers all costs associated with buying, including mortgage, interests, insurance and others, as well rental costs offset by investments on stocks, bonds and other assets. For the fourth quarter of 2016, the estimated breakeven period is 1 year and 11 months.
Given this, it makes more financial sense to buy a home only if you’re staying put for a long period. If you have a more mobile lifestyle, or see the need to relocate every few years for employment reasons, you might be better off renting.
- Where do you want to invest your money?
Real estate is generally considered to be a solid investment. Compared to stocks and bonds, real estate is tangible and this gives many investors a better sense of security.
Additionally, at the end of the mortgage period, you get a valuable piece of property that you can potentially sell at a much higher price than what you paid for it.
If your investment preference leans more toward securities and paper assets, however, renting could be the better choice for you.
- Are you willing to trade in some personal freedom for convenience?
One of biggest benefits you get from renting is that you have less to worry about when it comes to repairs and maintenance. The landlord takes care of most of them. But renting also comes with plenty of restrictions. You may not decorate or improve the property as you wish, and in some cases, you may not even have the freedom to own a pet.
When you own your home, you can pretty much do what you want with it. However, you and you alone are responsible for its upkeep.
Making the decision between buying and selling can be highly complicated, especially in a sought-after arealike Bergen County. If you need expert advice, get in touch with me today at email@example.com or (917) 621-6794.