Hamlet’s famous phrase “To or not to be…that is the question” sought to explore a profound question about the meaning of life. Well, today the question on the minds of of future homeowners might well be…”To rent or not to rent” Not necessarily as profound, but an important question nevertheless especially when one considers the recent history of the marketplace and the equity losses that were suffered during the economic downturn. The decision making process will be different for different circumstances. Let’s explore some of the issues which loom large on the minds of many potential home buyers today.
For starters, the typical renter has changed over the past decade. No longer are the majority of renters primarily young nor is renting necessarily about requiring more inexpensive housing. Increasingly, renters have their own unique sets of priorities which include folks who are moving into a new area but want to make a prudent investment decision based on their personal research of the community to those who are down-sizing due to retirement or those who have lost homes due to a foreclosure sale. So, there is not a ‘one size fits all’ answer for the question of renting vs buying.
According to a report by the National Association of REALTORS, first time home buyers represented a significant share of all housing purchases in 2010 (50%) due to the first-time home buyer credits. This combined with the fact that many homeowners could not readily move out of homes due to a loss of equity impacted the market by giving home buyers a distinct advantage in negotiations. However, since 2011, the West Michigan area and many other communities across the nation have witnessed a slow, but steady increase in home prices. Remarkably low interests rates coupled with historically low inventory levels have created an unforeseen problem for many would be home buyers…finding a suitable home availabe to buy!
Other pertinent questions to consider when pondering whether home ownership is a viable option for you right now are…
1. Does this feel right? Does the timing make sense for me?
Owning a home can be a source of pleasure and security for you. Countless homeowners will testify to the unique feeling of stability which ensues from home ownership. However, if you are purchasing a home which is stretching your financial resources or at a time when you may have to relocate, it is prudent to give thought to weighing your options carefully before jumping into the housing market. Historically, housing has appreciated. Many investment professionals vouch for having real estate in your personal investment portfolio. However, it must be noted that housing is not a highly liquid asset. It may take time to get your money out as the typical home does not sell over-night.
2. Do you like responsibility?
Pride of ownership is a phrase often associated with the benefits of owning a home. Home owners have the ability to customize a home to their unique tastes. Renters are often restricted with regard to the changes that can be made to a dwelling, but on the flip side the costs of maintaining and/or repairing the home are often borne by the landlord. Completing a home inspection prior to purchasing a home can reveal potential defects and give a reasonable assessment of some of the issues or items which a home buyer will need to monitor or replace. Considering the significant investment necessary to purchase a home, it would seem prudent to spend a few hundred dollars to check things out prior to buying.
3. Can you afford the payments?
This question is not about qualifying for the mortgage payment. Qualifying for a particular payment does not mean that you should accept the loan for a home. It is important to review your lifestyle and goals. Consider also the fact that the payment does not reflect other costs associated with home ownership which include items like utility payments, landscaping, repairs, furnishings, decor enhancements etc.
Home ownership can be a wonderful thing. It is a unique privilege and heartfelt part of the American Dream. As REALTORS, we are committed to defending and protecting the rights of private property owners. However, we also understand that the process of buying a home has many nuances and considerations. If you’ve been considering a home purchase and want to weigh your options in an informed, non-pressured way, please consider contacting our office for a free consultation.