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As the title suggests, would I be crazy to rent at this point when housing is affordable, and rates are so low?
Ok, more details about me. I am single, making upper $60k's a year in a a fairly stable and secure job at this time. Rents in my area are typically $850-$1250 for nicer apartments and/or homes for rent. There are cheaper, but they are typically older, run down, in less desirable areas, or do not offer the amenities I would be looking for.
I can afford to buy housing. Normal housing in the area, in good to very good neighborhoods and school districts can be had in the range of $110-$150. Taxes on these can range from $3200-$5500 depending on price and community (It is not a direct scale, one community might be at $3200 for a $140K home, where the next will be $5200 for that same home). Either way, within this range, most homes taxes, mortgage, and insurance would fall within the same $850-$1250 range.
Of course, I understand the home comes with more cost, updating, upkeep, maintenance, landscaping, etc. It also has more benefit in the long run, as some of the money put in goes to equity and personal wealth and not all to the landlord. The market is obviously still volatile nationwide too, but this area never saw the bubble or the burst. It has a very low foreclosure rate, and the average transaction prices have been creeping up during the recession.
I can certainly afford a home in the range. I have a mid 700's credit score and do not anticipate loan approval to be an issue. I can also comfortably put 20% down and cover closing costs within that price range while maintaining plenty of emergency funds.
With the mortgage rates being very low it seems worth it to purchase to me, although some people still think it wiser to rent.
Any opinions? I am certainly leaning towards buying, and feel I am secure enough in employment and financial situation to do so.
You already know the answer to this question. Buy! Buy! Buy! Lol! But seriously, interest rates haven't been this low in 6 decades. There are good deals on the market. Don't miss the opportunity.
What's the probability you will get married in the next five years? Have kids in the next ten years?
Are the neighborhoods you are looking at family friendly?
What is the probability you will be living in that house in ten years? If this is a high probability and the house/neighborhood will serve your family, then it is probably OK.
I would have written the same if the rates were 8%.
Real estate is local. Don't pay attention to the national news and information. If your area is holding strong, and you're even seeing appreciation as you mentioned, buying makes more sense. Yes, the mortgage would make up the rental amount, but you'll also get a nice tax deduction of the interest on the loan plus the property taxes you pay, so you'll be ahead of the game.
I vote you buy too - BUT - if you like moving every year or two, if you like picking up the phone and having someone else deal with maintenance issues, yard upkeep, etc....then pause long enough to give serious consideration to the change that will occur, on your time, if 'you' own the home, rather than being the tenant. Some people are okay renting - and actually like the ease of 'mobility' at lease renewal.....I think there are other considerations to make, than just the market and current interest rates.
I have some single friends who bought because of peer pressure about current market conditions, and I think they are miserable - they are never home due to busy active lifestyles, and they complain all the time about being tied down by their home. They miss condo living and having that responsibility of ownership in someone else's court.
Thank for the opinions. This would be a place I intend to keep 5-10 plus years. I am also shopping in nice neighborhoods with well rated schools, so when I marry and have kids I will not have a sudden need to move.
I do understand the daily tasks of upkeep. That does not bother me much. In fact, I think I would rather have my own place at this stage to make into what I want of it.
Remember to make low offers and buy low. If the first seller won't bite, go to the next one. Buying high is why we're in the mess we're in!
I agree! I found a house I loved and was very nervous about submitting a low offer like some family members had advised, but they actually countered close to what we wanted to pay. We are still in negotiations but we are in the range we wanted. They dropped the price a lot from their asking price, so the worst they can do if you make a low offer is say no. If you can afford to buy now, I would say go for it! The real estate market is all relative anyway. If you wait to buy then by the time you do, the prices will probably have gone up as well as the interest rates, and then you will just need more money to close to match the new price of the house. Good Luck!
That said, I would be very, very cautious. For example, the condo market is about to get slammed hard. It's like seeing a train wreck on a collision course. Also, we have a recored number of foreclosures to hit the market, with several noted economists saying we could see another 15% decline in values. If you are only putting 5% down, please be very, very sure you want to be in that home until you start seeing some appreciation and don't have to take a loss.
What I am saying: do not get caught up in the buying frenzy and buy a home for all the wrong reasons.....the rates are great....or the house has sold for more in the past. Buy a home because you can see yourself living there for a long time or you are prepared to become a landlord. But not because it's the current fad or someone tells you that you should.
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