Owning your own home can offer possible tax deductions, let’s you build equity by paying your mortgage instead of someone else’s and makes you the landlord.
The choice between renting or buying a home has historically been a close decision.
The latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
Statistically on average it is 17.4% less expensive in Honolulu (HI), all the way up to 53.2% less expensive in Miami & West Palm Beach (FL), and 37.7% nationwide to own a home vs. renting someone else’s!
Mortgage interest rates have remained low, and even though home prices have risen around the country, they have yet to outpace rental appreciation.
In short, the price of a home would have to rise by numbers like 23% in Honolulu (HI), all the way up to 45% and above in Ventura (CA), to tip the scales where renting becomes less expensive than buying.
Nationally, mortgage rates would have to increase by 145% above today's average of 3.7%, for renting to be cheaper than buying. Rates haven't reached that pinnacle since January of 1995, according to Freddie Mac.
Is buying right now, right for you?
There are multitudes of licensed Real Estate professionals who make it their goal to help you achieve your real estate goals. I personally refer to myself more as a matchmaker rather than a sales person. When I meet with a potential buyer I have a list of few questions to help determine where they are in the buying process, and what type of property they are looking for.
Some questions you might find helpful if you are trying to determine where you are at in the process are:
- How long will you want to own this property or live in this home? This can be a big determining factor as far as what parameters we use in our search. At the end of the day, buying a home is one of the biggest business decisions most of us will ever make, but it is a business decision. Did you know you can ask your Real Estate professional to provide a market analysis of the home and its current price? They will most likely also be able to give you stats on how many days it takes to sell a home in that neighborhood, both currently and historically.
- Does buying make the most financial sense for you right now? Experts recommend that you spend no more than one-quarter of your monthly net income on housing. Leading to our next question….
- Can I afford the house I need? Every market is different! My cousin just bought a fairly updated five bedroom, 2300 square foot house in a small-town Illinois for $89,500!!!!! Whereas homes in our area typically currently sell for $100 or more per square foot. Talk to a local mortgage lender who can help you determine what your target price range could comfortably be, as well as what a healthy time frame would look like for you to purchase a property. If you’re not there yet, most lenders will do a small amount of credit counseling, or refer you to someone who can help you understand the steps you need to take achieve the American Dream of owning your own home.