Buying vs. Renting

The absolute first step in purchasing a home is deciding whether you want to even buy a home or if renting might be a better option. Polling data shows that 95% of home owners and 72% of renters say that owning a home is the smart decision over the long term. Not only that but 93% of home buyers are happy with their decision to purchase and would buy again. Now, that’s not to say that buying a home is the right decision for every family and one must critically analyze your situation to determine what makes the most sense. However, even among renters 63% say they’re somewhat likely to purchase a home in the future. Home ownership has been tied with the idea of the “American Dream” and perhaps that’s one reason that 56% of home owners say they’re very or extremely satisfied with the overall quality of their family life, while only 36% of renters describe themselves in that way.

So what factors should you consider when debating a home purchase vs. renting? Of course affordability is one of the primary criteria. The relatively affordability of buying compared with renting is constantly changing and very recently through the “Great Recession” this pendulum has swung in favor of purchasing in nearly three quarters of the largest cities in the United States. Real estate pricing is always very local though so investigate your area to determine how the overall cost of ownership vs. renting stacks up. With today’s interest rates and cheaper housing than in previous years it’s certainly worth a close look at making a purchase.

The other main factor to consider before deciding to purchase is your stability. This means both job stability to be able afford the house payments, maintenance, and other associated ownership costs over a long term view. Another form of stability to examine is also your likelihood of staying in the same city. While homes can always be sold, today’s market demonstrates it’s not always quickly and for the price that you may need to get. Typically someone staying in a city for a short time period would want to avoid purchasing a home as even if the home were to appreciate there are costs for selling which can eat into any potential profits and make a loss a real possibility when selling shortly after buying.

Homes should be looked at first and foremost as a lifestyle decision and a home in which to establish roots. While many people over the years have been able to make money off of home ownership it’s not necessarily always an investment tool. Having said that, one of the greatest benefits of buying a home is the build up of equity which occurs with each payment, particularly many years into a loan at which time principal reduction is greatest. Money spent on rent is gone forever in comparison. There are many cases of people renting the same home for 30 plus years, completely paying off the home for the landlord, while themselves having nothing to show for their expense.

Buying vs. renting will always be a personal choice and some people will always prefer one over the other. Before making any decision though give some of the above factors a close examination to help you make the right choice for you and your family.

Stephen Woodall
REALTOR, GRI @ Long Realty Company
Stephen has made real estate his full-time career and passion since 2008, primarily specializing in the Foothills & the Northwest Tucson areas of Oro Valley and Marana. He is a multi-million dollar producer, representing both sellers & buyers. Stephen has tremendous experience in new home sales, listing & selling primary residences, listing & selling vacant land, listing & selling luxury homes, investment properties, rentals, and real estate development parcels.

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