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Which Makes More Sense For You? Renting Or Buying a Home

home for saleWith the Austin market hitting all-time highs in home sales averages and rental occupancy within Travis County at nearly 99 percent!  This can cause headaches for many homebuyers and renters alike with inventory lasting in some cases hours upon entering the market, and with multiple offers in some cases.  So, people moving to or around Austin must take into account many factors when it comes to looking at the local housing market to make the right move for themselves and their loved ones.

Reasons to rent

  • Flexibility. Renting offers an easy way to test an area’s safety, amenities and ease of commute.
  • Career uncertainty. If job stability is a concern, renting may be a better option since buying is typically a longer-term commitment.
  • Smaller cash outlay. Renting usually requires first and last months’ rent and a security deposit. Buying requires tens of thousands of dollars down.
  • Bad credit. Creating a history of on-time rental payments may raise your credit score and help you qualify for a mortgage that may better suit your needs.
  • No maintenance. There’s typically no need to worry about repairs – just report the problem to the landlord.  Incidentals. Sometimes utilities such as water, sewage or garbage are included in the rent price. Plus, many rental complexes include their own pool and gym.

Reasons to buy

  • Equity. This is the difference between the market value of your home and the amount still owed on the mortgage. As you make your mortgage payments and reduce the loan principal, you may increase your equity in your home.
  • Tax deductions. You may be able to deduct mortgage interest as well as property taxes from your income taxes. Talk to your tax professional for more information.
  • Creative control. Paint your walls bright orange if you want. Rentals rarely allow redecorating or remodeling.
  • Maintenance choices. Do it yourself or call your own contractor. An exception is a condo or homeowners association, where you might have maintenance covered.

Figure out your ‘breakeven horizon’

Determining your “breakeven horizon” can help you to better understand the costs involved before you make your decision. This metric, introduced by Zillow, uses market-by-market data to determine the number of years it would take for buying a home to become more financially advantageous than renting the same home.

“Given how high rents are and how low home values are in many markets, buying may appear to make financial sense even if you’re only going to be there for a couple years,” says Svenja Gudell, director of economic research for Zillow. “But then you have to consider the emotional stress that goes along with buying a home, moving and adjusting to a new neighborhood. It’s not the sort of stress most people want to deal with every 2 years.”

So, should you rent or buy?

Whether it makes more sense to rent or buy a home is something only you can decide, based on your lifestyle, location and personal preferences.

There are many great Austin area homes for sale. Click here to perform a full home search, or if you’re thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today’s market.

You may also call us at (512) 537-6739 for a FREE home buying or selling consultation, so that we may answer any of your real estate questions.

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