Analyzing the Cost Gap Between Renting and Buying
The question on the top of every first-time home buyer’s mind is whether or not it is cheaper to rent or buy. Arguments are frequently made about whether buying or renting makes more financial sense. Financial analysts watch the costs of both homeownership and the rental market to see which is more affordable. According to Realtor.com, the gap in cost between renting and buying has been steadily decreasing over the past years.
This chart reflects the cost gap between owning and renting that was calculated during quarter 4 of 2019 on a National Average.
There are many factors to consider… you can rely upon my real estate expertise!
Although the numbers still indicate that national average cost to rent is lower than the cost to buy, the gap between the two is decreasing. The cost to buy decreased from Q4 of 2018 from $1,658 to $1,600. On the contrary, the cost to rent increased 4% from Q4 of 2018 to Q4 of 2019 jumping from $1,254 to $1,319.
Overall, the cost of renting is still more affordable for most Americans while comparing monthly expenses. Especially in areas where the cost of purchasing real estate is extremely high. The following five cities have the biggest disparity between the percentage of income that goes toward owning and renting. These figures are based on median income, median rent, and median list price of properties.
There are many more costs to consider when comparing owning and renting. While renting may yield a lower monthly cost, it is important to recognize that monthly rent can increase year over year as a lease renews. Additionally, renting does not come with the added financial benefit of gaining equity in a property. Also, most people live in a smaller home while renting than the property they end up purchasing. So although the monthly rent versus mortgage may make it seem like it is more affordable to rent, it may end up costing you more money in the long term.
The best way to know for sure is to talk with your Realtor (me!) and a Mortgage Lender. I highly recommend talking with your mortgage lender. If you do not already have a trusted lender, I recommend loan originator, Tina Mitchell of Highlands Residential Mortgage. Tina is a fabulous lender! She has been in the mortgage industry for over 2 decades and has been recognized in the top 1% Nationwide. She is a numbers gal and should be able to talk with you about possible loan options. I also really like her communication style. Tina is available nights and weekends via cellular and meets in person, via phone, or using video ZOOM conferencing to meet with people. She is no obligation and great information. She also promptly follows up with informative emails including spreadsheets showing your different options and other relevant info in writing.
Click to schedule a video or phone consultation with Tina. She is even available via cellular nights and weekends!
I am happy to answer all your questions and help you by providing real estate reports, searches, and information that can help you determine whether or not this is the right time for you to rent or buy. Like Tina, I am a “no pressure, no obligation” professional. You can trust me to provide thorough information to help you to make important real estate decisions that work for you.
Call, text, message, or email anytime! Thanks!
Jennifer Suemnicht - Jen's Realty - RE/MAX Metro Realty, Inc.
www.JensRealty.com / 206-550-1676 / jen@jensrealty.com
