It’s probably one of the most significant financial decisions you’ll make in your life: to rent or to buy a home? That is the question that can difficult to answer. The truth is, there is not clear cut answer.
Following the economic crash that lead to the housing collapse years ago, the answer seemed to be pretty cut and dry: if you could manage it, then buy a home a now.
However, things began to change quickly. For example, prices in sunny Southern California rose by nearly a third in just two years. The majority of the post-crash homes for sale at significantly lower prices have been already been purchased. Yet, amidst signs of economic recovery, doubt continues to linger regarding the state of the housing market as well as the economy.
As a result, many potential home buyers are carefully reevaluating the housing market. They’re weighing the pros and cons of the ongoing rent vs. own debate: all-time low interest rates and higher prices, or the ease and flexibility of renting? Decisions, decisions. Additionally, though the job market has also shown signs of recovery, it isn’t quite strong enough to give potential buyers confidence in taking the plunge of home ownership.
As a result of all of these factors, home sales in Southland decreased by 10.4% throughout the first half of the year, according to a report from CoreLogic DataQuick. The devastating effects of the recession have still left many consumers leery. In fact, home sales throughout the United States have decreased, as more and more are choosing the security renting offers over buying.
However, studies have also indicated that the majority of renters do intend to purchase a home at some point. The only question is when? Though many consider home ownership to be more cost-effective and profitable in the long rum, this is not always the case. Home prices have been increasing much faster than rental rates. The gap between renting and buying continues to close.
There are also several financial reasons that consumers are choosing renting over buying, such high student loan debt and more stringent lending requirements. Additionally, perspectives have dramatically changed. Home ownership and a white picket fence is no longer synonymous with the American dream. The idea that purchasing a home is always a wise investment has become outdated.
“The monthly cost of renting was lower than buying in 20 large metropolitan areas at the end of last year,” says Svetlana Mosyurova, Marketing Director at Post Brothers Apartments in Philadelphia.
Many potential buyers assume they can afford their monthly mortgage rate, but often do not take into account additional and unexpected expenses that come with home ownership, such as taxes, repairs, and maintenance. These are issues that renters simply do not have to worry about.
Though the answer to the rent vs. own debate isn’t black and white, and there are many factors to consider, one thing remains constant; there’s no place like home, wherever that may be.