Homebuying Doesn’t Always Make Sense
There are many instances when it makes more sense to rent a home rather than buy. This issue is discussed in an Associated Press article I’m quoted in. It’s been published on hundreds of web sites and newspapers including Forbes. Even when you can afford to buy a home, many experts say it may not be worth the hassle if you donít plan on living in it for several years. Mortgage, HOA dues, maintenance, taxes and insurance can add up to more than double the price of renting an equivalent home in some markets. Add these factors to the cooling market, and it really seems like itís time to sit tight. Housing futures on the Chicago Mercantile Exchange point to declines of between 5.6% and 8.2% in the top 10 markets by next August (story on CNN Money).
Excerpts from the AP story:
For people like Xavier Lanier, 27, the rapid run-up in home prices in recent years - including in his home community of San Francisco - have discouraged him and his wife, Amisha, from trying to buy.
“In our neighborhood, a two bedroom condo costs about $700,000 to $750,000, and people are dealing with payments of $5,000 or $6,000 a month,” he said. “A similar condo can be rented for $2,000 and up.”
That kind of math has convinced him, that “owning just doesn’t make any sense” right now. Lanier also has watched what has happened to friends and acquaintances who have tried to buy despite the high prices.
“You really need to assess your overall expenditures, not just your housing expenditures, and ask yourself if you really can afford to buy,” said Eric Tyson, co-author of “Home Buying for Dummies.” “Home buying is not for everyone - and certainly not for everyone at every point in their lives.”
Diane Saatchi, senior vice president with the Corcoran brokerage in East Hampton, N.Y., said that in some communities, home prices are so high and rents are so low that many find it advantageous to rent. This is especially true in cities like New York, where rent-control laws have kept a lid on rental prices.