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When You Should Rent Versus Buy

Many Americans continue to be enamored with the dream of homeownership. Historically still-low interest rates, rising rent costs, and clearer mortgage terms at the closing table thanks to TRID (the new TILA RESPA Integrated Disclosures, designed to help borrowers understand the terms of their home financing transaction) do make this an excellent time for many to consider purchasing rather than renting a home. Timing, financial position, and home maintenance are some things to consider when considering a purchase, and why being a renter, rather than a buyer may still be a better consideration for some.

Will the buyer be living in the new home for at least five years? If a house is bought at market value today, the expectation is that the home will appreciate in value over time. (Unlike the height of the real estate "boom" of 2006-2007, where we are still seeing many homeowners that bought at that time with "underwater" mortgages, meaning that they owe more than the house is worth in today's market). Typically, we would see appreciation every ten years or so. Waiting at least five years to sell is a better position to believe that the buyer would be able to at least sell what they bought for.  Another item to consider is that the average employee tenure according to the Board of Labor Statistics in the U.S. is currently 4.6 years overall, and 3 years for millennials. That said, it may make some homeowners nervous about committing to living in one location for an extended period of time.

The price tag on a home can be discouraging. Sometimes renters will find that they can find a better fit in a rental versus a buy, in that what they qualify for in a mortgage limits them on the price range that they can afford. In addition, if a credit score is low, or there is no money for a down payment, it may be a better option to wait to rectify those situations when the buyer is in a better financial position, before adding more debt to the equation.

Does the thought of cleaning the gutters or mowing the lawn make you cringe? How about a leaky roof or electrical or plumbing problems? A consideration that many renters don't take into account are the added maintenance and other costs that come along with home ownership. With homeownership comes upkeep, and that means weekly and seasonal chores that need to be done to the house, and if a buyer doesn't like to do those things, they could pay someone to do them for him of course-another added cost. With a rental typically the landlord with take care of any structural or other defects that occur. Once you're a homeowner, though, those things are your responsibility.

If buying doesn't fit into your lifestyle or financial situation, then it's probably a better choice to continue renting.

Melissa Rolland is a licensed Connecticut realtor. She lives in Tolland, along with her husband Todd, a licensed broker. Together they manage the Rolland Realty Group at Keller Williams Realty. You can connect with them at www.RollandRealtyGroup.com.