Moving to Knoxville this summer...buy a home or rent???? (transplants, for sale)

[glharley]

Hello everyone,

My wife and I moving to Knoxville this summer as I am starting a PhD at UT, which will take ~4 years. Basically, I am trying to decide whether to buy or rent. I'm looking for purchasing a home in the price range of 130-150k (bottom of our price range) and we have around 10-15k to put down on the home. My only concern is being able to sell the home in 4 or 5 years when we go to move (given the nature of the PhD, we'll probably only be in Knoxville for only 4 years, then relocate to wherever I get hired). I'm posting to get a sense of the market up there (I'm from Florida, so I hope it's not as bad), and to get different opinions on the feel of what the housing market might do in 4 years in Knoxville.

Thanks for all of your help!

[Barking Spider]

While I don't have a crystal ball, I would have to guess that the equity on the home would increase far more than the rent you shell out each month will give in return.

You may want to rent to get an idea of WHERE you want to live, but if you already know the general area, then I would get with a Realtor, and go ahead and buy.

I have had a lot of clients that buy houses/condos for their kids while they are at UT, then sell them when they leave. Seems to be a smart move in my opinion, especially if you have to money to buy something (meaning down payment).

Just my 2 cents

[glharley]

thanks Barking Spider, I definitely appreciate your opinion. I plan on spending A LOT of time in the next couple months seeking out an area where the homes would have a high potential re-selling value in 4-5 years. I think if I can get a home cheap enough in a nice enough area, I can lower my chances of losing the down payment (& whatever other expenses, ie. maintenance, etc.) when I go to sell the home. My perspective is, as long as I break even on a re-sell, I'm not losing money. Anything (other than losing money) would be better than throwing money away renting, which I've done for the past 3 years.

[goodbyehollywood]

Your price point limits you, so I would rent for a little while, see how you like it and see how you feel after some time here. And see where the market is going into next year. A lot of the risk seems to be priced in, but you never know. Why assume needless risk until the economy finds its footing? Six months to a year down the road, you'll be in a lot better position to make an informed decision. Good luck!

[Beretta]

I saw some great condos for sale, in your price range, at Cherokee Bluff condos. These would be convenient to UT. Good luck and welcome to Knoxville!

[hiknapster]

The economy and real estate are bad across the country. There are few bright spots. Knoxville's market has been slightly flat and then went down over the past couple of months.

However, it is nowhere near having the problems that Florida is facing.

Bear in mind, though, that Knoxville's real estate surge was based on transplants from bubble markets moving here. Right now, there are areas of Florida that boast cheaper prices than Knoxville. That is going to make a difference. Some people will buy in Florida before they buy here. I'd buy in Florida right now if I wasn't repulsed with the area so much.

Having said that, I would rent first. You need to get a feel for the area and no amount of internet advice will give you that. I've been here two and one-half years, and I still don't know where to buy. Plus, I am watching the market go down in the entire area.

Also, there is a wealth of rentals in the area. Sweet deals. My head is swimming with them. It is a fallacy to think that it is always cheaper to buy rather than rent, especially in these economic times.

[Eat]

Originally Posted by hiknapster

Also, there is a dearth of rentals in the area. Sweet deals. My head is swimming with them. It is a fallacy to think that it is always cheaper to buy rather than rent, especially in these economic times.

dearth = lack of. Is that really what you meant? "Sweet deals" sounds like you are saying there a lot of rentals on the market right now.

I agree with the rent first suggestion. That's good advice for most newcomers to the area.

[bfskinnerpunk]

I'd rent.

After owning two homes, I am becoming more and more interested in the idea that renting may be the wisest choice.

The amount of money and time I am spending on home maintenance is a big deal.

For the vast majority of the past 15 years, I have rented. When I have rented, the rent was well within my means... meaning, I didn't rent a fancy apartment or live in a fancy area.

So as long as you rent well within your means. You are going to be fine. As long as I have rented, I have chosen to slum it and it has always been a liberating experience: no home ownership worries, and no financial issues.

Over the past seven years or so, homeowners felt like geniuses. They watched their home value launch into the stratosphere.

Unless you happen to buy just before such a crazy market, I'm not so sure that homeownership is the greatest financial decision. I'm not saying that its a bad financial decision, but I wouldn't fool myself into thinking that it has great benefits over renting.

Most of my friends do not account for all the money they spent on their home when they sell. Sure, they remember the kitchen improvements, but they do not account for the lawn care, lawn equipment maintenance, and various BS things you have to do and pay out to keep a house running.

I bought a house for a change of pace... and I wanted to get back into gardening... and not having to ask the landlord if I could have a dog! Also, while renting these past years, I forgot about the labor and $ involved in homeownership!

That said, I would guess that this is a lovely time to buy a house! I think that sellers are fully motivated to sell...and who knows how long this real estate depression will last. Even if it lasts, it doesn't mean that prices will continue to drop.

In every situation in which I have bought a house, I would have been much better off if I would have rented and invested the extra money used for down payment and home maintenance in a typical mutual fund.

[JMT]

I personally enjoy being a homeowner. I don't know that I'm better off financially or not since I generally buy homes in areas that don't appreciate very quickly (I like neighborhoods with a bit of an edge to them). But I just happen to like the freedom of doing what I want, when I want, in my own home.

However, if you know for a fact that you're not going to be here for long, then renting might be the way to go. If you knew you were going to stay in Knoxville for 10+ years then I would strongly encourage you to buy.

Even though the real estate crisis hasn't hit Knoxville nearly as bad as other areas, it's still slowed down quite a bit. A lot of sellers who haven't been able to sell their homes are starting to turn them into rental units. There's a good chance that you'll be able to find a good deal on renting a home that's been sitting on the market for too long, and the owner is willing to cut you a good deal just to get some positive cash flow.

[heathdawn]

I do agree on renting for 6 months if possible just in case things do change at UT or you change your mind on the area. If you are in FL now then you should know that buying a condo is not always the best choice. It may be different in TN but I think it can still be a bit risky. Good luck.