There are few situations when it’s better to rent a home instead of buying one.
I get a lot of questions from renters who are thinking about buying a home. Most commonly, I’m asked about whether it’s better to buy or rent a home in today’s market. It’s a hard question to answer, since everyone’s life situations and needs are different.
There are some times when renting may make sense. For example, you may be new to the area or might not be in your home for a long time. It’s hard to recommend buying when a person will leave within a year, as their home likely won’t appreciate enough to cover the costs of selling. So, if your living situation would be short term, it may be best to rent.
In almost all other cases, though, it’s usually better to buy. We can’t predict whether our crazy levels of double-digit appreciation will continue, but historically, homes appreciate by about 3% to 4% every year. Let’s say we only have 1% appreciation each year—if you live in a home for seven years and sell it at a 7% increase, that’ll likely cover all of your closing costs and related fees. That means you got to stay in a home for seven years without paying rent. Essentially, you broke even, but you were also able to write off mortgage interest as a tax deduction.
Buying a home makes a lot of sense, and it helps you create a cycle of building equity and using it to move into bigger, better homes. Additionally, you’ll typically see more appreciation on higher-priced homes.
If you have any questions or are ready to begin your home-buying journey, feel free to reach out to me. I look forward to hearing from you soon.