It’s no secret renting is getting increasingly expensive. As of June 2018, rents have gone up another 5.8 percent year-over-year. That’s 1.1 percent greater than the 4.7 percent increase last year and the largest increase of any month since January 2008!
The US Bureau of Labor and Statistics CPI tracks rental costs by polling consumers vs other measurements from landlords. Between 2009-2014, this CPI tracked a yearly increase of 1.7 percent.
It begs the question rent or buy?
Sure, renting is a fixed cost but you don’t gain from the equity in owning a home. You do, however, have the ability to move at the end of your lease, which gives you mobility should circumstances change in the future. That said, an owner can also terminate your lease at the end of a lease term which can be rather inconvenient.
Owning a home comes with unexpected costs. Whenever a major system or appliance fails in the home, it’s on you to fix it and that can cost a pretty penny. However, each month your payments go towards paying down your mortgage and provides you equity with which you can leverage for future purchases, remodeling, etc.
In owning a home, you have the security of knowing that you will always have your home to live in and, should you need to leave, you can always rent it out. The initial investment is much higher with purchasing vs renting, however, a common misconception is the 20 percent rule. To buy a home, you do NOT need a full 20 percent down. In fact, financing options allow you to put as little as 3 percent down.
Something important to consider, though, are closing costs. In purchasing a home, you can typically bank on paying anywhere from 0.5-1 percent of the purchase price in closing costs – sometimes more. That is above and beyond the down payment and an important chunk of change to factor in when considering buying.
When renting, personalization is limited. You are living in someone else’s home which means you may be restricted from painting walls, changing window coverings, or any other personal touches. Owning a home is like starting with a blank canvas. You can do with the home as you please (within reason, of course).
Lastly, owning a home offers tax advantages. That said, you also must pay property taxes, an expense that is not incurred when renting.
Ultimately, only you can decide if buying or renting is better for you. Renting does allow for a lot of flexibility in some regards but it also has its restrictions. If you are happy renting or waiting until you have all four financial ducks in a row, we offer a number of great properties for lease. From high-end single-family homes to 1-bed condos and everything in between. Check out our available inventory here. If you’re considering owning a home, we can help with that too! We are known for our distinct strategies that average our buyers a net savings of 6 percent on the value of their new home! Click here to learn more.
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