There is no one answer to this question, there are many factors that one should take into consideration, some are personal issues other will be out of the subjects control such as market factors, interest rates etc.
Price is most likely the biggest factor. Is it cheaper to rent or to buy. A common misconception is that buying is much more expensive then renting, however, in reality, long term buying is usually cheaper then renting (But not in all cities). Home prices have taken such a beating (In most cities) and demand for rental units has increased so much so that it is now cheaper to buy a two bedroom home then rent one in most major cities. Trulia research has through its website indicated that as of July 2011, buying as opposed to renting was cheaper in 74% of the country's 50 cities contrastingly in only 26% of the cities renting was cheaper. However in 14% of those cities there wasn't a great difference between the cost of renting and buying.
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| Rent or buy |
Las Vegas,Detroit, Mesa, Fresno, Arlington, Sacremento, Pheonix, Jacksonville
The top renters markets are:
New York, Ft Worth, Omaha, Seattle, San Francisco, Kansas City
CNN.com suggested the following as factors that should be considered in the decision making process when deciding whether to buy or rent:
Should you rent or buy?
The buy-rent calculation is just one part of the decision-making process. Other factors include:
- How long you plan to stay. If you're not keeping the home for several years, transactional costs of buying and selling (e.g; commissions, closing costs) can wipe out any buying edge.
- Whether you have cash for closing. It's not easy to find banks willing to lend more than 80% of the cost of a home. That means buyers have to come up with 20% down, plus closing costs. On a $200,000 home, that's $40,000.
- Whether you can cover all the homeownership costs. It's not just the mortgage: There are property taxes, insurance, heat, utilities and regular maintenance.
- Whether you can claim the tax advantages of homeownership. Mortgage interest is deductible and can shave a lot off tax bills but this benefit accrues mostly to high income earners with substantial mortgage payments. Many borrowers claim the standard deduction on their taxes and so derive no savings from the deduction.
Recently, because of the status of the market and economy renters have become more common then buyers. However in Philadelphia now is a good time to jump to homeownership. The US government has provided excellent incentive for this by introducing and extending a tax credit for first-time homebuyers and have kept interest rates at their lowest since the 1940s. The premium to buy is the difference between what you pay monthly to own a home rather then rent. In Philadelphia the premium to buy has dropped dramatically. One factor that Philadelphia offers is the likelihood of appreciation. In Philadelphia there are some strong industries such as healthcare, pharmaceuticals and education with a relatively healthy labor market that should keep producing jobs the demand for jobs should increase and therefore home prices should continue to go up.
Here are some Philadelphia statistics:
Premium to Buy, 15-year Average: 28.4%
Premium to Buy, Q3 2009: 18.7%
Five-year Home Price Index Forecast: 13.85%
Median Rent: $957
Median Home Price: $227,500
Blended Mortgage Rate: 5.33%
Premium to Buy, Q3 2009: 18.7%
Five-year Home Price Index Forecast: 13.85%
Median Rent: $957
Median Home Price: $227,500
Blended Mortgage Rate: 5.33%
The bottom line is Philadelphia is an excellent buyers market, so pick up your phone and call your local real estate agent and explore your options.
Buying and renting are among the most frequent debates these days when it comes to housing opportunities. While both can give benefits, one must be able to recognize and consider things first whenever he/she chooses one over the other.
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