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Why it Makes More Sense to Rent than Buy

11 Jun 2018

Posted by Joseph Coupal

HHHunt Apartments

Nearly two-thirds of Americans live in areas where it is more affordable to rent than buy.

A majority of Americans are renting on the cheap — at least, compared to what they’d be paying if they bought a home.

Most Americans (64%) live in a county where renting takes up a smaller portion of one’s paycheck than buying, according to a recent report released by real estate data firm Attom Data Solutions. And yet in more than half (54%) of housing markets — 240 of 447 U.S. counties — buying a median-price home is actually more affordable than renting a three-bedroom property.

So why the seeming contradiction? Even if they can’t afford to buy, the majority of people are renting in areas where they get the most bang for their buck. The buy-versus-rent calculus is shifting toward renting being more affordable. With a strong jobs market they want to stay mobile and often can’t afford to buy near urban centers where they’re more likely to get a job and a job at higher wages.

Renting may be better than owning to build wealth — if you’re disciplined to invest the money you save by not owning a propertys. When considering buying and building wealth through equity appreciation versus renting, and reinvesting in a portfolio of stocks and bonds, property appreciation does not change the results.

What’s contributing to this shift toward renting?

Interest rates are expected to increase throughout 2018, making buying a home with a mortgage less affordable for many — even younger Americans who aim to pay off their home in 20 or 30 years and reap the appreciation of a rise in home values. And tight housing inventory across the country is fueling competition for homes that makes them more expensive.

Plus, the “drive until you afford” mentality has made many once-affordable suburbs and exurbs vastly more expensive. Large swaths of the New Jersey and New York commuting belt have seen double-digit house price increases over the last 12 months, for instance. In fact, single-family rental is the fastest-growing segment of the housing market.

The tax bill has further complicated the math in deciding whether to rent or buy. Under the 2017 tax code, a family of three with an annual income of $150,000 would be better off buying if their rent exceeded $1,507 per month. But with the new tax code, they’d have to pay more than $1,885 per month to make buying worthwhile.

More renters may also find themselves priced out of the housing market, because home prices are appreciating more quickly than rents in 59% of markets.

What’s more, in 60% of markets rents are rising faster than wages. As a result, more renters may also find themselves priced out of the housing market, because home prices are appreciating more quickly than rents in 59% of markets. And the old adage of not spending more than 30% of your income on rent (or a mortgage) is increasingly difficult in cities like San Francisco and New York.

For more information contact HHHunt.

Source: marketwatch.com

Should I Rent or Own My Home?

24 May 2018

Posted by Joseph Coupal

HHHunt Apartment HomesWith 10 months left on a 2-year lease, my husband and I are tripping over ourselves in the rent vs. buy dance.

Buying seems like the next most logical life step for two gainfully employed recently wed 30-somethings. With a mortgage we’d pay less for more space and have something to call our own. We’d finally feel settled, build up equity and do typical HGTV things like renovate bathrooms over and over again.

But at what cost?

For us, buying would most likely mean moving further outside the city, adding an undesirable commute and a tax on our most valuable asset: time. It would mean dropping hefty sums of money on unexpected expenses for things I’ve always taken for granted in my rentals like roofs and air conditioners and carpet. It would mean tying ourselves to a multi-hundred-thousand dollar anchor.

Most people will try to talk you out of renting with a logical financial argument in favor of buying. They’re not wrong. It just makes mathematical sense that in most major American metros, buying is cheaper than renting in the long run.

And then there’s the social pressure. Once I was trying to convince a friend to sell her place, move closer to the city and rent an apartment like mine since the commute was wearing on her. Her response was that she didn’t want to “go backwards” in life. It had never occurred to me that I was behind because I didn’t own a house.

For me, financing a suburban American dream I don’t want to live doesn’t make sense. Where most look at homeownership as a step in the right direction towards personal and financial success, I see it as a big expensive burden that moves me deeper into debt (albeit a strategic investment) and further away from my desired urban, unrooted, minimalist lifestyle. That’s hard to maintain as a first-time homebuyer.

So we decided we’re not in a rush to buy.

I’m sure home buying will be for us eventually, but for now we’re content to save up some more cash and relish the often overlooked finer things of the renter’s life.

Renters don’t have to fix even the simplest things that break — Our door lock busted the other day. I called our landlord and he had a locksmith there to fix it (on his dime) pronto. Could I change out a lock? Yes. Would I rather someone else do it? Yes.

The biggest renovation decision a renter has to make is what color paint to use.

Renters don’t have to buy or replace expensive basic life necessities — I’d be content to go my entire life never ever paying money for a toilet.

The bank doesn’t have your life by the throat for 30 years — Home buying is smart debt if you do it right but debt makes me queasy regardless. I save up and pay cash for my big purchases. I worked three jobs in grad school to avoid taking out loans. And if I could rummage it up, I’d pay cash for a house. (Might have to be a tiny house though.)

Renters don’t cut the grass — This, of course, depends on your housing situation, but if you’re in an apartment without a lawn or a house rental with built-in HOA maintenance, you’re lawn mower free, my friend.

You can pick up and leave whenever you want — This is the big one for me. If I land in a place I don’t love, I like knowing I’m out at the end of the lease. I also like knowing I could leave the city all together. I’ve been in Charlotte for 6 years. My family is here. My business is here. I should have bought a house a long time ago. I’m not going anywhere. But I like knowing I could go anywhere if I really wanted to. That freedom, I think, is the best part of being a renter.

For more information on apartments, contact HHHunt.

#HowYouLive

charlotteagenda.com


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