As we round the halfway point of the year, I’d like to recognize and thank everyone who reads and supports my articles. As my predecessor, Stephanie Lemley, acknowledged when she handed over the reins, it also surprises me (1) the number of people who read the articles and (2) those who reach out and offer accolades and support. I hope the articles continue to offer some entertainment, direction and education in the real estate world. As renting versus buying continues to be an ongoing debate, perhaps it should be discussed more than just once a year. The topic has the tread in an ever changing market as it could be discussed on a quarterly basis. That being said, let’s dive in….
Primarily the decision to rent or buy is ultimately YOUR decision. What may be the motivation and purpose for one may not be the same for another. Gather as much information before making your decision. Your goal is to be able to look back and not regret your decision. Let’s take a look at some direction to guide your motivation and thought process. First of all, let’s consider the cost. Rent is simple. You pay the rent and maybe the utilities and that’s it. The landlord pays the property taxes, insurance, HOA fees (if applicable), and overall maintenance costs. Make sure you consult with a mortgage lender to keep your finances and credit in check. Local mortgage lenders help determine if you can not only afford the mortgage payment but also the additional costs that come with owning a home.
Forecast where you are in your life with any projected life changes. Don’t just buy a house because you’ve reached a certain age and/or it is what your peers and colleagues are doing. It’s difficult to determine with the war in the Ukraine, a looming recession, a dramatic cost increase in groceries, fuel, overall materials, and the fallout of a pandemic that just won’t go away, if there ever IS a right time to buy. Low inventory and high demand have pushed home prices up over 15% in some markets, which means buyers can expect to pay more for the same home compared to a year ago. The frustration for buyers continues as the inventory shortage and increasing rates create an annoying sound of a stopwatch to make a huge financial decision. Hang in there. I’ve noticed a slight increase in inventory over the last few weeks. The rate on a 30 year fixed mortgage when I wrote this article is 5.22%. Yes it’s increasing however in 1991, interest rates were 10.13% and in 1981, rates were at an all time high of 18.45%. Also keep in mind, when you rent, you’re paying 100% interest rate and you are building 0 equity.
Deciding to give your landlord notice and move forward with the purchase of a new home is certainly a complex decision with many different factors and emotions at play. That decision must be what’s best for you and your family. If you decide to make that decision, know that there are local professionals that are ready and willing to help.
Until next week, Love where you Live. And if you don’t… contact your local REALTOR®.
Brian Haufe, 2022 MBOR President