Again with the Renting vs Buying!

With a title like that, you’re probably expecting us to expand on the undeniable virtues of home ownership and to once and for all lay out how it wipes renting’s proverbial derrière in terms of the best life decision ever.  Well, we’re about to say something sacrilegious in the world of folks who sell real estate for a living:  renting vs buying is not a clear cut, one size fits all decision for everyone.

What you need to consider

There are a ton of factors that need to be evaluated before you can decide if renting or buying will be the best financial choice for you, such as length of occupancy, interest rates, amount of rental inventory in your area, condition of the home, your abilities in the world of property maintenance, monthly cash flow, and even how you like to spend your free time. These are all issues we help our clients evaluate when they are trying to make the “should I rent or should I buy” decision, and yes there absolutely have been times when it makes the best sense for a client to rent a home instead of buying one.  It costs money to maintain a home and home owners should be prepared to put aside 1% of the sales price each year, for home maintenance and repairs.  If cash flow is an issue for you, purchasing a home might not be the best decision for you at this point in time.

Rent vs Buy: the breakdown

For a great side by side comparison on renting vs owning this is a great read:  Why the Rent vs Buy Debate is Completely Pointless, (which in a nutshell shows renting and buying coming in at a dead heat), but from our point of view, there are a few more important factors that may give an edge to home ownership over renting:

1.  Mortgages are still cheap:  Even with rising interest rates, mortgages are still relatively low cost (interest rates in 1981 were around 17%!).  That means that in many cases, your monthly payment can be cheaper when owning a home, vs. renting.
2. Credit:  Owning a home and paying off a mortgage shows financial responsibility and a long-term history of on-time mortgage payments. And that means strong credit for responsible home owners, which is a big help for other large purchases you may want to make.
3. Equity:  If you own long term, you will build up equity and that equity can be tapped into for emergency expenses, home improvements or your kids college tuition.

Tight Housing Markets

Additionally, for Cassandra and Brian, and for many of the folks we talk to who are desperate to get out of the world of renting, the main benefit of home ownership is about control.  In a tight housing environment, your landlord might be tempted to dramatically raise your rent, or sell the property out from under you.  In housing booms like the Portland area has been experiencing for the past 5 years, this scenario is common.  Renters are displaced and new rents are higher making it very difficult and stressful to find a new place to live.  A big benefit of home ownership is that fixed monthly payment for your principal and interest (if you choose a fixed interest rate mortgage) and a sense of control about where you will be living long term.

A Reflection of You

Finally, there’s the intangible pleasure of improving your abode and making it a reflection of your needs and your passions and your talents.  As two people (your HouseLovePDX team) who thrive in that vein, we’ve personally experienced that feeling of restraint when we’ve rented homes.  There always was the urge to beautify and improve the space around us (in my early adulthood I begged all of my landlords to let me replant and garden the small beds outside my apartment doors), but we knew it would be a waste of time and money, or that it would not be allowed by the landlord.  Like so many of our clients who are renting, and come to us for help evaluating and making a purchase, Cassandra and Brian talked about that same sense of discontent they felt in their rental, and a deep rooted urge to improve, change and update their living space so it truly reflected them and their family in a fundamental way.

If you are struggling with the renting vs buying debate

We’d be happy help you evaluate the issues in a way that will clarify this decision for your particular circumstances.  Maybe you’ll decide to be content with growing plants in pots on the sunny balcony of your rental apartment, or maybe you’ll end up with a late mid-century beauty that you’ll be thrilled to improve, update and beautify, just like Cassandra and Brian did!