For many years, the go-to advice for people looking to buy or rent was that buying was the better choice. You’re making an investment in your future, you’re building equity and you’re paying your own mortgage, not your landlord’s. All of that stuff is still true, but in 2021 with the market the way it is, more and more people are questioning whether buying really is better than renting at this point in time.
One recent study shows that renting will cost you less per month in the country’s 50 largest metro areas. There are a lot of things to consider when facing the rent vs. buy dilemma. Renting won’t tie you down to one place, with a large mortgage that takes 30 years to pay off. But on the other side of the coin, buying your own home is a profitable long-term investment that comes with many tax benefits. Buying also gives you peace of mind knowing your landlord can’t ever kick you out.
However, in today’s hot seller’s market, not only is there a lack of inventory to select from, the prices have skyrocketed and buyers are clamoring to “win” homes by offering ridiculously high prices offset by contingency waivers across the board. Temper that will falling rent prices where landlords are having trouble filling vacant apartments and are resorting to offering lower rental rates and more concessions.
LendingTree reveals that median housing costs are lower for renters than for homeowners with a mortgage in 50 of the largest metro areas. The biggest difference between rent and mortgage is in NYC, where the gap is at $1,360 a month. In San Francisco and San Jose CA, the gap is more than $1,000.
When Is It Better to Rent?
If you’re just considering your mortgage payment, you may think buying is a no-brainer. But there are other housing costs to consider that go beyond the mortgage itself. With rent, you pay rent and maybe utilities. With a mortgage, you also pay property taxes, HOA fees, and all the costs of upkeeping your property, such as landscaping, snow plowing, fall and spring cleanup, roof replacement, pest control, HVAC services, etc. Many of these expenses pop up unexpectedly, too.
When Is It Better to Buy?
Buying a home and investing in a piece of property is, in a perfect world, the best solution. If you have the financial resources to do so, it’s still better to buy than rent. If you’re building up money in order to be able to afford a house in the near future, renting may be more sensible, at least for the time being.
Recent reports show that owning an average-priced, three-bedroom home is still more affordable than renting in about two-thirds of the nation. Plus, you’re building equity in a home you will eventually own. And of course, mortgage rates are at an all-time low right now. This is a big part of what’s attracting people to buy.
In the end, whether to buy or rent is a very personal financial decision.
Contact Berkshire Hathaway Premier Properties
To learn more about the pros and cons of renting vs. buying and how we can help, please contact Berkshire Hathaway Premier Properties today at 832-626-4889.