For generations, buying a home was considered the cornerstone of the American dream. However, in recent years, people have been debating whether buying a home is always better than renting. When it comes to buying versus renting, there are many factors to consider. Let’s take a look at current conditions, and what to factor when making this important life decision.
Google Trends is showing a moderate rise in those searching for homes to rent, while Interest in buying homes is also returning with a roar.
What’s Up for Home Buyers in 2020
- long term fixed mortgage rates are falling further
- home prices are stable
- listings are falling to record lows
- home prices are still high
- rent prices are aren’t going down
- economy is in tatters and may not recover this year
- wage demands could fall considerably
- employment rates are at historic levels
- more new construction units becoming available but not enough to satisfy demand
- more people have saved the down payment
Key Benefits of Buying
- creates long term wealth accumulation
- tax advantages
- rental investment income possibility
- greater feeling of security and stability
- interest rates are low currently
- it may be cheaper to buy than pay high monthly rental rates
- there is a ongoing housing crisis with high demand which may continue to push prices higher
- real estate as an asset has performed better than any other asset type in the last 30 years (if you consider tax write-offs, price appreciation, and rental income, it outperforms by far)
Key Benefits of Renting
- no down-payment stress
- no worry about mortgage commitments
- no high cost of house and property maintenance
- no worry of buying a money pit
- no worry of mechanical breakdown
- freedom to travel and move
- many buildings and condo complexes have fitness centers and swimming pools
- no worry of another 2008 housing market collapse
- unemployment doesn’t mean you could lose your investment
Making an accurate comparison between the financial impact of renting and buying starts by factoring in the complete costs of home-ownership—not just mortgage versus rent payments—as well as an accurate assessment of how owning would affect your taxes. Rather than simply focusing on monthly or annual costs of the buy versus rent decision, consider which option would have a greater positive impact on your overall wealth at the end of your stay.
A quick rent vs. buy comparison could be done using the price-to-rent ratio. Price-to-rent ratio is calculated by dividing the home value by the annual rent amount. Generally speaking, if the price-to- rent ratio is less than 20, buying might be a better option. On the other hand, if the ratio is greater than 20, renting might be better. Needless to say, any ratio or comparison is meaningful only if you are comparing similar properties.
To get a better view of your buying vs rent decision, try out the rent vs buy calculator. This widget still requires your input on forecasting a few things, yet it might help clarify the pluses and minuses for you.
The housing market in Florida is currently strong and based on market research, it will continue to be for years to come. Housing prices are not incredibly high and are selling which is affordable given the average income in Florida. Buyers in Florida can also take advantage of building a new house for around that same price, which will also prove to be a great investment.
At the end of the day, renting vs buying is also a personal decision that boils down to life circumstances and everyone’s needs will vary. Navigating the process with an expert is essential for saving time and connecting the best resources to execute your decision. Whether it’s pinpointing the perfect cityscape highrise to rent or building your dream home on the beach to retire in, or finding the ideal investment property that incorporates both renting and buying, we can assist with every aspect of the process. Contact us to get started today.