In some markets, renting is the most economical method of living, especially if you will only be in that area for a short period of time. A study by Trulia, an online home-search site, shows that in 72% of the largest U.S. cities, buying makes more financial sense. Here’s why:
1) The market is at the bottom price-wise. Most feel that we may have a few rises and dips along the way, but over the next 7-10 years, home values will rise. That means equity an owner can earn that a renter cannot.
2) There are still tax advantages to owning a home, such as the mortgage interest deduction.
3) Once you buy a home, your payments only have a potential to go up if you are in an Adjustable Rate Mortgage (ARM). As a renter, after your year lease is up, your landlord could raise the rent. So, as an owner, you have more control over your expenses.
4) Former home owners have recently flooded the rental market after they work through their short sale or foreclosure. That has caused rents to increase in many areas.
5) Even though there are definitely expenses to owning a home, these expenses are normally covered in the increase of home value over the years. Now if you install a gold-plated swimming pool, that probably won’t be the case.
Here in the Cumming, Forsyth County, Georgia area, real estate saw a definite price increase from 2000 to 2007. I can remember years where we had 7 and 10% gains year over year. That has not only corrected, but actually receded to roughly year 2000 levels. Even with all the upheaval, it’s still a great place to live and work. Some of my friends say we live in Disneyland.