I found an excellent article on renting versus buying in an unlikely source, Metropolitan Home. Here are their reasons why you should rent, and some numbers to back it up:
1. Homes won't appreciate in value the way they have been up to this point. The average price of a single family home this past May was $206K while last year it was $223K.
2. Financing is harder to get these days. A 30 year morgage rate is 6.5 percentbut since the housing bubble banks are tightening their requirements for loans.
3. Renting is less expensive. Between 1996 and 2006, real rents increased 4% while house buying costs were 20 times this, and that is not factoring in additional fees like closing costs.
This made me wonder: is this the advice being given out these days to perspecitve home owners? The New York Time's recent look at Rent Vs. Buy for me sums it up: be especially cautious now and don't buy what you can't afford. Makes sense to me.
So in the meantime, I'm a 27 year old with no property of my own, putting away 20% of my income for that time in my life when I will be ready to buy. Unlike some trendy outfit I regret purchasing, this is not a decision I want to rush.
Rent Vs. Own According to Suze Orman…
The Digerati Life Takes On Rent Versus Buy…
I always appreciate when I hear more people talking about this. Right now we are not in a position to buy a home at all, but back when we were “target” homebuyers before starting graduate school I was amazed at how many people told us that “it’s always a good time to buy” and we should “stop throwing your money away by renting.” I have seen too many people get in over their heads and even sadly declare bankruptcy because they didn’t evaluate their situation very well. I’m content to wait as long as I need to before diving into home buying, even though I’d love a house. So, thanks for a reminder that this is a decision worth taking very slowly.
Jaysus, 27 years old and thinking that responsibly? When I was 27, I was still trying to figure out how to recover financially from that six year bender. Haven’t worked it all out yet.
What about the matter of mobility? If you buy a house and then decide next year you want to move to Butte, Montana, you’re stuck with the prospect of trying to unload a house in a tough market. That’s always seemed troubling to me.
Buy a house you love. As an investment though, you’re better off investing in the stock market, this current economic crisis notwithstanding.