Some people think it's cheaper to rent a home than buy. BUT it's actually the opposite!
According to ATOM Data Solutions’ 2017 Rental Affordability Report, buying a home is more affordable than renting in many areas. The report found that making monthly house payments on a median-priced home — including mortgage, property taxes and insurance — is more affordable than the fair market rent on a three-bedroom property in 354 of the 540 counties analyzed in the report. That's 66% of the counties!
Take a look at the map and you will see that it's actually cheaper to buy a home than rent a home in Tarrant County!
For the report, ATOM Data Solutions compared recently released fair market rent data from the Department of Housing and Urban Development with reported income amounts from the Department of Labor and Statistics to determine the percentage of income that a family would have to spend on their monthly housing cost (rent or mortgage payments.)
Rents have been surging faster than home prices in about 37% of the markets measured.
“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017. In that scenario, renters who have not yet made the leap to home ownership will find it even more difficult to make that leap this year.” - Daren Blomquist.
SO what SHOULD you do? Should you buy or should you rent? Consider these five factors:
1. Equity - The money you spend on rent is money you will NEVER see again. You are paying someone else's mortgage. In other words, you are helping your landlord build equity. If you buy a home, you build equity on the property. Invest your money, don't give it away!
2. The local economy - The Dallas/Fort Worth area is projected to have the strongest market in the US for 2017!! (Based on relative expectations for investment, development, and home building. ULI 2016) Unemployment in the DFW has dropped to 3.5% (The US is at 4.6%) What does this mean for buying a home? A great economy means a great real estate market and the best potential for value appreciation.
3. Taxes - If you rent, you pay someone else's property taxes. If you own a home, you can take property taxes paid as a deduction on your taxes. (Not professional advise and always check with a tax professional to verify your individual taxes.)
4. Stability - Rents increase. Each year a renter renews a lease they are guaranteed it will be more expensive than prior year. Once you sign a fixed-rate mortgage, the principal and interest portion of your payment will not change.
5. Control - When you rent, odds are, you are not allowed to make it your own home. Home ownership gives you the freedom make the kitchen or bathroom look the way you want it and make it into your dream home!
Now that we've tackled the argument of renting vs buying, here's the cliff notes for a few other myths in real estate
1. Having the assistance of a professional guide you through the process doesn't cost you anything - The seller or builder pays the real estate agent for bringing the buyer to them! Hire someone that will help you know what to buy, where to buy it and what you should pay. It's in your best interest and it's FREE!
2. You DO NOT need 20% to buy a home - Believe it or not, you can buy a home with as little as 3.5% down. In fact, a lot of our buyers go this route. The only benefit to 20% down other than lower monthly payments is that there's no mortgage insurance on the loan. Some loans can be structured so there is no mortgage insurance and what takes its place has a tax benefit as well.
What's the take away on this? Rents will continue to rise and mortgage interest rates are still at historic lows. Before you think you can't afford a home and sign or renew your next lease, meet with The Tosello Team. Our team of professionals can help you determine if you are able to buy a home of your own and lock in your monthly housing expense. Did we mention that you don't pay?