The Age Old Debate: Rent vs. Buy
The “rent vs. buying” debate is one of the longest standing, critically analyzed topics of discussion in finance circles and potentially THE most popular discussion in real estate. Though professionals in the housing industry will typically argue that buying a home is one of the best financial investments you can make no matter the state of the economy, on the other side of the fence lie the die-hard renters who appreciate not having to pay taxes or high repair costs and the stability of a fixed lease agreement.
If you’re among those who favor renting, consider this: According to the U.S. Census Bureau, the homeownership rate in the U.S. is 64 percent. Additionally, the economy has never been better for Americans to realize the dream of homeownership, especially in Atlanta.
One of the main indicators on which economists base their decisions if renting or buying is more lucrative at a given time is the state of rental markets. Across the U.S., the average rent payment rose an astounding 12 percent from January 2013 to December 2014, while home prices increased only 5.8 percent, according to MainStreet. Nationally, RealtyTrac found the monthly home payment on a median-price home is more affordable than the monthly fair market rent in 76 percent of U.S. counties.
RealtyTrac, who analyzed data provided by the U.S. Department for Housing and Urban Development, found that Atlanta is among the top 25 cities with the least affordable fair market rent in the U.S. The interactive Trulia Rent or Buy map shows that buying is an astounding 55 percent cheaper than renting if standard target monthly rent, home price and other factors are used.
As The Washington Post highlighted this week, mortgage rates are hovering near all-time lows. The 30-year fixed rate has remained below 4 percent since November, hasn’t been above 5 percent for more than four years and hasn’t reached 6 percent in a decade. According to the latest data, the 30-year fixed rate average is 3.65 percent and the average 15-year fixed rate average is 2.94 percent. Buyers are taking notice of the lucrative time to buy as mortgage applications are at the highest level since June 2013
While it’s important to take into consideration the current state of the economy before making any major financial decisions, many of the benefits of buying a home will never fluctuate. Clearly identified as one of the best financial investments you can make, buying a home beats tossing away money every month on rent and has proven to be a good diversification of assets. Homeownership has also been linked to greater pride in your community and lasting, positive effects on children.
Homeownership is almost always the clear winner, but in this economy, you can’t afford not to invest in a home.