Own or Rent

I am looking to buy a house.

I came across this great article that makes you think to be sure you are choosing the right option for your situation.

This came directly from the News and Observer Parade:

“Before the housing boom went bust this year, homeownership was considered a good investment. But now, with the rash of mortgage foreclosures, renting may be a more attractive option. Here’s why.

Renting can save money.

According to the popular myth, renters are just throwing there money away. But the reality is that when you buy a home, you’re paying for closing fees, mortgage interest, property taxes, private homeowners’ insurance and maintenance — costs that return nothing on your investment. You’d be better off banking that money or putting it into the stock market. IN fact, a recent study by Fidelity Investments indicates that stocks provided investors with nearly 4.6% higher average returns in the last 45 years than real estate.

Homeowners’ tax deductions are overstated.

Conventional wisdom says that buying a home saves you money because the mortgage interest is tax-deductible. But a study by the National Multi Housing Council points out that half of homeowners don’t get a break, because even with mortgage interest and property taxes, their total deductions do not exceed the stanard federal tax deduction ($10,900 for couples and $5450 for singles).

There are more options available to renters.

With fewer houses and condos selling, more owners are converting their properties into rentals or providing incentives to lure prospective tenants. In condo-heavy cities such as Palm Beach, Fla., for example - where the vacancy rate has jumped 2.5% - investors are undercutting apartment rates to generate interest.  A lot of people are offering three free months to attract renters, says Robert Smith, a real-estate adviser in Orlando, Fla.  And modern apartments offer amenities that may be unaffordable in a new home.

Renting Give you Flexibility.

Buying a home is a big commitment.  If you have to move for any reason-say, for work-your property would need to appreciate by at least 10% for you to recover your sales costs, which typically takes about five years.  Renting allows you the freedom and mobility you need to find the right job before you tie yourself to a massive home investment.”

With all of that said, I think that if you are planning on staying some where for 3 years or more, it would be a good idea to buy a house.  The way I see it, most of the money you put into a house, you get back - instead of renting, you get absolutely nothing back.  Even if your property starts to decrease in value, which is a one in a million chance, you still aren’t losing as much money as if you were renting.

I am actively looking for a house/townhouse as of now.  My lease for my apartment is up August and hopefully I will find a place before the deadline for me to resign comes up.  I would like to find a roommate that I know and trust so I would have more spending money - but I am very independent, so it will be hard to find anyone I’d want to live with.  Either way though, I will be updating my experience of purchasing a home, or, if I have to sign a lease again because I ran out of time.

Rent

The buildings I am in were built in the 1980’s, the appliances are new and they have great service, when you need something they fix it right away. I received a new lease agreement in the mail, saying my rent was going up $30. When I asked management why it goes up so much so fast, they said everyone is going up, the average between $30-50. I don’t understand why rent goes up so much so fast. The mortgage that the owners are paying on the buildings doesn’t go up, insurance and employee wages do, but $50 per tenant will add up to a lot more than the small increase the employees will get. I understand everything is a business and everyone wants to get paid, but to go up $30-50 a year per tenant is lucrative for the same service.

With the increase last year and this year, I will be almost up to $700 a month for a one bedroom, 790 square foot apartment. A little over a year ago I was paying $615, now $680? The housing situation has forced some home owners to move back into an apartment complex. I don’t have numbers on the occupancy to capacity rates for either before the credit crunch or now, but I would imagine the apartment communities are at a higher occupancy rate now, meaning they are bringing in more, as well as charging more? People do take advantage of situations, and it makes sense, but when is too much? The range between the rich and the poor is expanding.