To Buy or Rent?

To buy or not to buy that is the question. People are always wondering if they should buy or rent. The buy versus rent scenario has been an ongoing question.

In today’s market, buying a home is much cheaper than renting. Finally, the answer has never been more obvious. Thank goodness!

It is unusual that buying is the better choice since renting seems to come out ahead most of the time. Mortgage payments, maintenance and transactional costs, and property taxes make buying less appealing. But not anymore!

According to Trulia, the online real estate company, buying a home is more affordable than renting in 98 of the top 100 housing markets. Only in San Francisco and Honolulu is renting the better option. There are several reasons why this trend has taken off. Home prices are falling and mortgage interest rates are at low levels. At the same time, rents are extremely high and on the rise.

According to rent.com, rents have the potential to rise 7% in each of the next two years. Nationally, home prices are down by more than 30%.

However, many people are not in the position to buy a home. Despite lower rates, the greatest barrier to homeownership is getting a mortgage. Saving up for a down payment for a home is difficult for renters paying rent each month. It often pushes renters away from owning their own home.

You are probably wondering what the cheapest buyer’s market is. And the winner is…Detroit. Turns out Detroit is the place to be when it comes to buying a home!  Toledo, Ohio, Oklahoma City, Dayton, Ohio, and Warren, Michigan are other areas where buying a home is much better than renting.

However, you must take into account submarkets within a single housing market. Also, the size of the home is an important factor when deciding to rent or buy. In some markets, renting could be the wiser choice with a larger house. In places like New York, Boston and Dallas, renting is still considered more favorable.

Ken Johnson, a real estate professor at Florida International, believes that home prices nationally have bottomed. He says that “Markets should slowly start to recover. Housing will return to its traditional role of a safety investment.” Basically he is trying to encourage people to stop renting and buy while the market is low. It could end up being a great long-term investment once home prices begin to rise.

So, if you have the money and you are ready for the commitment of a home, then you should take the leap and BUY, BUY, BUY! Home prices are only going to go up in the next few years. If you are thinking about buying, right now is the best time to make moves. In the long run, it is the best investment you can make. Many experts believe that paying off a mortgage is a forced savings plan. You are less likely to spend your savings. 

Overall, it’s a big decision that needs to be thoroughly thought out.