People are no longer looking for expensive, urban rental options. Instead, they are looking to buy their next home. Why is that? Is the grass always greener on the other side? It might be if you have a large front yard!
Rental properties in large cities have hit a plateau. Many former city dwellers are now turning to smaller and less expensive cities because they no longer have to work in large corporate offices and can, instead, work from home. What should you do when considering your next living situation? You may be moving to a new city, and need to decide soon. The answer to your question depends on the location where you live, but in many cases, buying is still your best option.
Buying a House
In a recent poll of 50 of the largest metropolitan areas, residents from at least 15 of these cities said they preferred buying a home to renting one.
Even with the historical growth in the real estate industry in the last five years, the monthly cost of a mortgage is often less than the monthly rent. This trend could be due to the current low interest rates, but it may also be because people are moving away from large, expensive cities and out towards smaller communities.
This is true for both families and businesses. Companies that buy houses are also beginning to search in the suburbs for investment properties. The same goes for first-time homebuyers.
Real Estate Trends
Recent studies on current real estate trends suggest that 15 of the 50 metropolitan areas analyzed offer cheaper home prices, a lower cost of living, and a better family environment. In contrast, states like California, New York, and Colorado have a much higher-priced housing market but a cheaper and more abundant rental market. In addition, the smaller cities also had fewer zoning regulations and often had a smaller demand for new housing units.
In notoriously expensive cities like San Francisco, Los Angeles, Denver, and other areas on the West Coast, people often find it makes more sense to rent because the monthly cost of a mortgage far exceeds the rent cost.
Of course, we must also consider that these markets also have a higher population with well-paying jobs. Professionals who have plenty of cash to spend may feel better making a monthly equity payment, even if it is $3,000 to $4,000, than to pay rent to someone else. Add to this that there can be considerable tax savings and a possible increase in property value, and buying becomes even more attractive.
Renting a Home
There’s no arguing that home rental comes with plenty of benefits too. For example, you are not tied to a location. Especially if you can negotiate a short-term or month-to-month lease, you can quickly move to another city whenever you want to. Additionally, there are fewer worries and responsibilities when renting versus owning. If a tree falls on the roof, typically the landlord will pay for that cost. You can sit back and enjoy the property without worrying about major capital expenditures that come along with owning real estate.
Unfortunately, when you rent, you don’t make the rules. Carefully review any lease that you sign before going into an agreement with a property owner. There may be limitations on things like pets, gardening, and house alterations. Are you the owner of several large dogs? Depending on the breed, there’s a chance certain landlords will not rent to you. Do your due diligence, and make sure that it is a good fit before you rent a house.
Rules and Regulations
If you plan on moving to a different state, be aware of the regulations and rules regarding real estate. It’s important to know this information whether you are owning or renting. Certain states are very tenant-friendly if you are renting, but have insanely high property taxes. A good example of this is California – a very expensive state. Property taxes are high compared to other states, which does not help when owning a property. However, if you are renting, the laws governing landlords and tenants are strong to protect tenant rights.
Given all of these factors, we would have to say that the answer to the question as to which is better, ownership or rental, depends on your personal needs and the things you want for the future. We can say that investing in a home can give you a more stable financial future, but in some cases, renting a home could also be the better option.
As we mentioned before, people who have had a significant work environment change and now work entirely from their home are deciding to move to states that have a lower cost of living and lower real estate market values. In doing so, they can afford to buy the home of their dreams.
We hope you found this blog post Does it Make More Sense to Buy a House or Rent? useful. Be sure to check out our post Renting Vs. Homeownership: Which Option Is Right For You? for more great tips!
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