Tuesday, August 31, 2010
Is it better to Buy or Rent?
For many who are not able to land in a home, a new debate his risen over whether it is better to buy or rent homes. Right now, many who cannot afford to buy a home can rent one for little cost, yet the study shows it only takes about 6 years for buying a home to be worth it. With the current recession and the economy recovering, would you consider buying a home instead of renting? Or Wait?
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6 comments:
I would say, if there is any doubt you cannot afford your house over a period of time dont buy one. Thats the reason we got into this problem in the first place. Renting has to be the better option for people since its that or no house. Owning a house and defaulting on payments would be worse case for you.
I would buy a home. With the tax break on buying a new home and the fact that interest rates are so low right now buying a house would be a good idea. Also, renting homes is usually a year to year or couple of year thing, it is often not looked highly upon for those individuals looking for a long term steady environment. With that being said, there is still the possibility of defaulting of ones payments. There is the possibility of not being able to make payments on a renting home as well so buying the house seems like the best thing to do in my opinion.
I think everyone would rather own than buy of course. Who wants to give money away to someone with little to no control over what they do with the space they live in? (as in an apartment) Houses are great investments, especially when you don't foresee yourself moving anytime soon.
Scott points out that the banks being too lenient, trusting, over-zealous, whatever you word you want to use there, the banks' (and other lending agencies) policies are pretty much the opposite now. Good luck to someone with bad/no credit to get a loan, even if they probably can afford it with their level of income.
Buying a house at time of low interest rates and high prices like now is a mistake. It's still much cheaper to rent than to own the same size and quality house.On the coasts, annual rents are 3% of purchase price while mortgage rates are 6%, so it costs twice as much to borrow the money as it does to borrow the house, not even mention you still have to pay for taxes, maintenance, and insurance after buying the house. Since interest rates have nowhere to go but up, prices have nowhere to go but down. Thus I think the way to go is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates. Then you get a low price, and you get capital appreciation caused by future interest rate declines. For now, RENT!
Renting at a time like this is the best option for most people. Especially if they do not know what is happening with there job. The worst case scenario would be for someone to purchase a house then loose there job. Once you know your job is secure and the economy picks up, I would recommend buying instead of renting. I do not like the idea of renting because the property isn't yours but some people just don't have options right now.
Renting a house is far more economical than buying for the vast majority of those currently without a home. The pursuit of the "American Dream" of every citizen owning his/her own house was arguably a large factor in causing the housing bubble and subsequent collapse in the first place. While it might not be as glamorous to rent a home, it definitely makes more economic sense (and is also far less work) than owning a home for many Americans.
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