Is Renting the Best Option for You?

May 16th, 2011 | By | Category: Market Update

Buying vs renting | The Sahuarita ConnectionRenting is the best option for some people, but if you plan to stay in your home for at least 3-5 years, it might not make good financial sense.

Just this week the Harvard University Joint Center for Housing Studies released a report analyzing conditions in the rental market. The study found:

Rental markets are now tightening, with vacancy rates falling and rents climbing. With little new supply of units in the pipeline, rents could rise sharply as demand increases.

This increase in rental costs is already taking place. It’s simple economics: an increase in demand and a decrease in supply leads to an increase in cost. In addition, we are seeing tenants in the Sahuarita area who are left scrambling to find new rental properties quickly because their rental properties have gone into foreclosure.

Trulia recently released its second quarter 2011 Rent vs. Buy Index. In the report, they stated that buying a home has become more affordable than renting in nearly four out of five (78%) major cities.

”With home prices nearing a double dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying,” says Ken Shuman, Head of Communications at Trulia. “As we head into the summer buying season, those looking to buy a home should be encouraged by improvements in the market and feel optimistic about their chances of finding an affordable home, much more so than in previous years.”

“Aspiring homeowners should focus their energies on locking down a low mortgage rate sooner than later. While home prices are unlikely to return to pre-crash levels, today’s low interest rates will likely rise thanks to inflation and spikes in the Fed rates,” notes Shuman. “As the government wind downs its role in the mortgage markets higher mortgage interest rates will be inevitable.”

Other benefits to buying include:
Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years. Property taxes and insurance costs may increase, but your base mortgage will remain the same unless you refinance your loan.
Freedom and Stability. The home is yours. You can decorate it however you want!
Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, and some of the closing costs associated with purchasing your home.
Equity. When you pay your rent, it’s like kissing your money goodbye. Paying your mortgage payments builds equity owner-ship interest in your home. If your equity rises above your mortgage balance, you will profit when you sell your home.

As it is likely that rental prices are going to continue to rise, you may want to consider consulting with a lender and Realtor to see if purchasing a home would actually SAVE you money. Buying isn’t the right choice for everyone, but it won’t cost you anything to at least explore the possibility.

For more information, call Mary Benavides at 520-248-2130 or email mbenavides@longrealty.com