Should I Rent or Should I Own?
For more and more people, the answer is coming back “I Should Own”.
Since there are all kinds of behind the scenes forces at work (interest, property taxes, tax savings, appreciation, closing costs, etc.), the rent vs. own question is more complicated to answer than simply comparing the monthly mortgage payment to the monthly rent payment. To help with this, we have provided two rent vs. own calculators on the right (one a little simpler and one more robust) that take all these factors into consideration and provide a detailed answer specific to you and your families particular situation.
Advantages of Owning
Almost everybody makes a monthly housing payment that builds equity (or wealth) in the place that you live. The question is, who is benefitting from that wealth building? If you’re making a monthly rental payment to a landlord, the answer is your landlord. But if you were paying the same amount every month in the form of a mortgage payment then you would be building wealth for you and your family. Who would you rather benefit in the long term?
Many renters think that they simply can’t afford a new home. But with rising rental rates, low new home prices and historically low interest rates that simply isn’t the case in most instances – especially if you are planning on staying in your new home for more than 2 years. Zillow, a highly trusted real estate website, recently published the results of an in-depth study showing that in a huge majority of markets across the US owning makes better financial sense than renting and owners start to build wealth for their families in three years or less. In fact, most of the areas that Hayden Homes builds in show a quicker than average return on your homeownership investment.
Below is a list of some of those areas and the number of years it takes to “break-even” and start building wealth from a new home purchase:
Spokane - 2.6 years
Bend - 4.3 years
Redmond - 2.7 years
Eugene - 3.9 years
Springfield - 2.8 years
Salem - 2.8 years
Richland - 2.3 years
Kennewick - 2.1 years
Walla Walla - 3.2 years
Moses Lake - 2.0 years
We all have a rental horror story about the disrespectful neighbor who lived above you and partied all night or the terrible landlord who stopped by unexpectedly and is always in your business. But you wouldn’t have to worry about those issues if you owned your own home, plus you would have the flexibility to do what you want with your new home – paint the walls the color you want, hang as many pictures as you want on the walls, choose the features and finishes that fit your style and have as many pets as you can care for. With your own home it’s all up to you, not someone else.
Peace of Mind
With a new home you are not only building wealth for you and your family, but you are creating peace of mind and stability as well. The peace of mind of knowing that your monthly payment isn’t going to change from year to year, the peace of mind of knowing that nobody will be stopping by unexpectedly to “check up” on you and the peace of mind of knowing you got a great deal on a new home that fits your families needs and the peace of mind of knowing that your family has a place to grow and call their own.
Seize the Moment
We know that home ownership isn’t for everybody, but with the current state of the rental and real estate markets it seems to be the answer for more and more families. Interest rates can’t stay this low forever and home prices have already begun to rise (see articles below) so if home ownership is right for you then now truly is the time to stop renting, become a homeowner and start building some wealth for you and your family.
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Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home.
This New York Times Interactive Buy or Rent Calculator shows graphic comparisons. Use the advanced settings button to change inputs such as your rate of return on investments, condo/common fees and your tax bracket.