Even in light of rising home prices, Trulia‘s October 2016 “Rent vs. Buy Report” successfully argues that owning your home with a conventional 30-year fixed rate mortgage costs less than renting in major US metros, even in high priced areas like Honolulu, HI (which sees 17.4% cost reduction over renting). The highest difference was 53.2% in Miami, FL and West Palm Beach, FL.
Nationally, the average was an impressive 37.7% cost reduction.
It’s a Game of Pace
Even while home prices are appreciating nation-wide, interest rates have remained so low that the pricing increase has not approached matching rental inflation.
Prices would have to appreciate 23% in Honolulu, HI, to over 45% in Ventura County, CA before renting, at current rates, becomes less expensive than buying. On the other side, rates would have to approach 9.1%, which would be a 145% increase over the current average of 3.7%, for renting to be financially more attractive than buying. (We have not seen rates like those since January 1995, according to Freddie Mac)
Consider also the Family Wealth aspect of home ownership, coupled with ownership being closely tied to the American Dream, and the reduced out-of-pocket cost of owning over renting, and it might make one wonder if the benefits of renting are really worth it.
Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.
The numbers are clear. It makes good financial sense to be a homeowner. Let’s not forget the slice of the American Dream that comes with it! If you are interested in taking advantage of the benefits of home ownership, but aren’t sure where to start, call or contact me today!
Should I Rent Or Should I Buy?