What is the Timing on When I Should Rent vs Buy?
By Bob Preston
There are a lot of good reasons to rent in the current real estate market but the nagging question prevails… rent vs buy? Some people like the flexibility and mobility of renting. It gives them the ability to move quickly if they need to or live in a place temporarily while scoping out the local real estate market for a long term buying opportunity. In other cases, renting is a matter of economics. Either way, the rent vs buy decision is a tough one. From a basic financial model, however, interest rates are on the rise so we were wondering what the impact might have on the affordability of buying moving forward. Here are some interesting facts found in a recent article in Forbes Magazine.
The recent rise in mortgage rates has made buying a house a little more expensive: the increase in the 30-year fixed rate over the past month from 3.4% to 3.9% (Freddie Mac) raised the monthly payment on a $200,000 mortgage by $56, or 6%. However, because mortgage rates are still near long-term lows, and because prices fell so much after the housing bubble burst and remain low relative to rents even after recent price increases, buying is still a good deal compared to renting. That means that the recent jump in rates doesn’t change the rent vs buy math much.