Recently one of the major real estate web sites performed a survey of the 100 largest metro areas in the country. The purpose of the survey was to help people decide whether to purchase or rent a home.
Should I Buy or Rent?
In each of the 100 metro markets the survey showed it was cheaper to purchase a home than to rent. In some areas the cost of home ownership was 50% less than renting. On the other side of the scale it was only 20% cheaper to purchase. Only 20% less! On average it will cost you 37.7% less to purchase a home than to rent.
The Federal Reserve Bank reduced interest rates once in 2019. And it’s expected that rates will be reduced again. But to offset the advantages of purchasing over buying, rates would need to be raised considerably. However, what should worry you more than interest rates, should you decide to purchase a home, are rising home prices. This is because as housing prices rise, the costs for landlords also rises, which increases the rental costs.
Overall, the benefits of low interest rates have been countered by rising prices of homes. If you can afford to make a 20% down payment, it will cost you 37.7% less to purchase a home than to rent similar housing. Interest rates would need to double to negate the financial advantage of purchasing a home.
Purchase or Rent
This is a difficult decision. Most accountants will recommend that you rent, and have your money make you money. Conversely, most attorneys suggest that you purchase.
The benefits of home ownership are obvious. You will receive tax benefits from deducting your mortgage interest and property taxes. You won’t need to move if the landlord decides to sell the property. If you want to paint or remodel to fit your needs and desires, you can.
But there are also benefits to renting – repairs are the landlord’s responsibility. You won’t need to save a large down payment, just the security deposit.
Talk to your financial adviser to get advice. Speak with a mortgage broker to find out the true cost of purchasing. Then speak with an experienced Realtor, like us, to help you find you dream home. Call Bunny and Art Reiman – The Adult Community Specialists. We’ve helped hundreds of families buy and sell adult community homes, and we can help you!