For the most part, renting a home in many places in the country has been a better financial choice than buying a home in some places, particularly places like Southern California and the Pacific Northwest. Because of declining home values over the past few years, renting could have saved you thousands of dollars in lost home value each year. If you’ve been one of those folks who have been renting and have been constantly challenged by friends and family who believe that owning is always better than renting, you probably feel some level of vindication.
Having said that, it may now be the time to consider buying. There are some places across the country where it is actually cheaper to buy a house than it is to rent. Some of these places include Las Vegas, Phoenix, South Florida and others. There are places, too, like St. Louis as well as Indianapolis, that have not experienced a housing bubble previously and can also be cheaper to rent.
This isn’t the case everywhere, however. San Francisco and Seattle still have homes that are much higher than they were before the bubble. You’re going to see higher monthly costs on your mortgage than if you rent.
Other areas are more of a mixed environment. New York and Los Angeles are the prime examples. There are neighborhoods where you can rent for significantly less than buying, and neighborhoods where the opposite is true.
There are other factors to consider in the equation. Today’s new home buyer tax credit can get you up to $8,000 for buying a new home. On the other side, however, renters insurance is significantly less expensive than homeowners insurance, so you need to take that expense into account.
The bottom line is this: in a market like today’s housing market, it all comes down to individual circumstances. There are places to live where it’s better to rent, and places where it’s better to buy. It’s all about your individual situation, as well as what the local market is doing at any given time.
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