Should I Buy or Keep Renting?
July 8th, 2010
Some people would have you believe that the answer to this question is simple and across the board. They may argue that you are throwing your money away of you rent. While no one would argue the fact that your money is gone when you pay the rent, never to be seen again, the truth is that most of the money paid for a mortgage is also thrown away. There are many expenses associated with home ownership that never seem to make their way into the discussion, notably the extreme difference in price between homeowner’s insurance and renters insurance.
So, is renting better for you? It might be. No matter where you live, buying a house is all about paying interest for the first ten years. And interest paid is money thrown away just as surely as rent is. Add to that the fact that most apartments are cheaper as far as utility bills, and the fact that the renter is generally not responsible for maintenance, and you can make a good case for renting over buying, especially if you’re not planning on staying in the home for the duration of a mortgage.
One major factor to consider that many people don’t bring up is where you live. In some parts of the country, the prices of homes are fairly low, making it a reasonably good idea to buy if you can afford to. In other parts of the country, rent is actually quite reasonable compared to high property values, making it more sensible for many people to rent.
There are several cities where the price to rent ratio point to renting being a good idea, and contrary to popular belief they are spread throughout the country. Here are some examples by region:
- In the Northeast/ New England area, New York City is but one of many cities with very inflated house prices. The average home in the Big Apple goes for over a million dollars. For most people, it makes more sense to rent.
- In the Midwest, cities such as Cleveland and Kansas City have reasonable rent compared to the price of a house of your own.
- In the Great Plains, Omaha, Nebraska is amongst the best cities to rent rather than buy. Average rent is less than $900 per month, wheras houses are averaging over a quarter million.
- The West Coast has lots of cities where property prices make it more affordable to rent. Some of the ones with the most extreme disparity include San Diego, San Francisco, and Seattle.
These are just a sampling of the many areas where high property costs and relatively low rent can cause renting to make a lot of sense for most people. Before deciding what makes sense in your area, go over the numbers thoroughly, and make sure you’re including all of the relevant costs, including your homeowners or rental insurance.
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