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Buying or Renting - Which is Better?

by Melissa Thompson


With interest rates still relatively low but predicted to start rising, buying a house right now is less expensive than renting in many places, including Memphis, TN.  Now is a great time to lock into a rate.

Buying is often considered to be financially better than renting over the long run because your mortgage payments build equity in your home, which you will eventually own, while rent only goes toward the upkeep of your home and the wallet of your landlord.  That is just one reason buying is better than renting. Here are some others:

  • You can do what you want with your property. Making home improvements will be your choice, from the colors to paint the walls, to light fixtures, to types of floors and more. You won’t need permission from a landlord to make changes.
     
  • Tax benefits. Tax deductions are a great perk of home ownership. Homeowner Tax Benefits 2019
     
  • Stable monthly payments. Rents can go up, but with a fixed-rate mortgage, your monthly payments won’t change.
     
  • Forced savings.  Renting might seem less expensive, but would you save the money you don’t spend on rent?  Since your mortgage payments are building equity in your home, which you can later sell for profit, it’s like a forced savings.

Using a Rent vs. Buy Calculator you can see how buying is a better financial option right here in Memphis. For example, after 2 years the cost of homeownership (down payment, mortgage, taxes, etc.) for a $85,800 home in Memphis would be $40,187. The total cost to rent the same house for that period would be $25,683.  Renting would leave you with $14,503 in your pocket (including the money you didn’t spend on a down payment).  So, it would seem that renting would be better financially, right?  But wait…not so fast.  Let’s look at what you gain over the same 2-year period if you buy.  After 2 years, your home will have $28,418 in equity. However, if you instead rent and invest your down payment and other money you save at a 6% return rate, it will earn around $1,743 in 2 years.  So, if you look at your gross costs, equity and investment potential, it’s better for you to buy than rent if you plan to live in your home for more than 1 year and 6 months.

The bottom line is, if you’ve been thinking about buying a home in the Memphis area, don’t wait! Start investing your money in your own home vs that of a landlord today!

If you are in the market to buy or sell a home in the Memphis area, contact professional Realtor, Melissa Thompson, and let her help you with all your real estate needs. Give her a call at 901-729-9526 today!

The Cost of Renting vs. Buying a Home

by Melissa Thompson

Some Highlights:

  • Historically, the choice between renting or buying a home has been a tough decision.
  • Looking at the percentage of income needed to rent a median-priced home today (29.2%) vs. the percentage needed to buy a median-priced home (15.8%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

Let the experts at The Melissa Thompson Team help you decide if now is the right time for you to purchase a home! 901-729-9526 or [email protected].

By: KCM Crew

The Cost of Renting vs. Buying in the US

by Melissa Thompson

The Cost of Renting vs. Buying in the US [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Historically, the choice between renting or buying a home has been a tough decision.
  • Looking at the percentage of income needed to rent a median-priced home today (29.2%) vs. the percentage needed to buy a median-priced home (15.8%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

Thinking about buying your own Memphis TN home, Call your local expert’s at The Melissa Thompson Team 901-729-9526.

 

 

National Apartment Report: September 2016

by Melissa Thompson

Where is rent increasing and decreasing the most?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nearly Half of U.S. Renters, Even Rural, Are Cost-Burdened by Housing

Price is the most important factor for those seeking a home, whether they’re looking to buy or rent, yet affordable housing remains increasingly difficult to find. According to recently released analysis, nearly half of renters are cost-burdened.

Recently, the Joint Center for Housing Studies of Harvard University used the most recent American Community Survey data available to paint a picture of housing costs around the country. The JCHS reports that 49.3% of renters in 2014 — totaling 21.3 million people — were cost-burdened, meaning that at least 30% of their income went to rent and utilities. Nearly a quarter of renters, 22%, were severely cost burdened, spending at least 50% of their income on housing costs.

Still, housing costs continue to increase. ABODO’s data shows that over the past month, those increases were mainly felt in Miami and Bakersfield, CA, which both saw their rent rise 9% since August. A one-bedroom in Miami now goes for $1,739 (up from $1,599), and in Bakersfield it’s $725 ($669).

Two other California cities also saw some of the country’s largest rent hikes for September, with Fresno up 6% and San Diego up a gentler 2%. Philadelphia rent jumped 7%, from $1,291 in August to $1,379 in September. Detroit, Minneapolis, Memphis, and St. Louis also saw higher rents for September leases.

Although three California cities saw rent hikes, several of the state’s large metro areas also enjoyed some of the largest rent decreases, with average San Jose rent dropping from $2,790 to $2,455 — a 12% difference. Los Angeles also dropped 8%, Long Beach 7%, and San Francisco 6%.

Seattle takes the lead, however, for the nation’s largest rent decrease, down 13% from $2,170 to $1,890. Boston and Charlotte saw 7% decreases, and Chicago, Baltimore, and Lexington were close behind with 6%.

Nationwide, the average rent for a one-bedroom in August was $932. In September, that crept up to $940. It’s a small difference, but it shows that even though large metro areas saw more significant rent decreases than increases last month, the nationwide trend is still upward — meaning rural communities and smaller cities could be bearing the burden.

JCHS reports that 41% of rural renters are cost-burdened, especially in rural counties adjacent to coastal metro hubs, where property values are higher and residential land is limited.

For example, the small city of Kingston, NY, just two hours north of New York City, is home to roughly 24,000. Among renters, 67.3% are cost burdened, paying about $1,000 monthly for housing on an average household income of $27,900. In Kingston — ranked by JCHS as the nation’s #1 most-burdened metro- or micropolitan area — 39% of renters are spending at least half of their income on housing.

Compared to 2010, when just over 30% of rural renters nationwide were cost burdened, these numbers are staggering.

Although homeowners feel the squeeze as well, it’s generally to a lesser extent, and the number of cost-burdened homeowners is growing more slowly. In 2010, about 18% of homeowners were cost-burdened, creeping up to about 22% by 2014.

Rent prices have increased by 3% in Memphis, TN from August to September 2016. This ranks Memphis as the #8 city in the entire U.S. to have seen the biggest rise.

Now is the right time to buy a home because rent prices are increasing.

Be sure to contact Melissa Thompson, Your Key to Memphis Team with Crye-Leike for all of your Real Estate needs - 901-729-9526 or [email protected]

 

By and photo credit: abodo.com

Don’t Get Caught in the ‘Renter’s Trap’

by Melissa Hayes Thompson

Don’t Get Caught in the ‘Renter’s Trap’ | Keeping Current Matters

There are many benefits to homeownership, one of top ones, is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

The National Association of Realtors (NAR) just released their findings of a study in which they studied “income growth, housing costs and changes in the share of renter and owner-occupied households over the past five years in metropolitan statistical areas throughout the US.”

Don’t Become Trapped

The study revealed that over the last five years, a typical rent rose 15%, while the income of renters grew by only 11%. If you are currently renting, this disparity in growth could get you caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment.

The top 5 markets where renters have seen the highest increase in rents since 2009 are:

  • New York, NY (50.7%)
  • Seattle, WA (32.4%)
  • San Jose, CA (25.6%)
  • Denver, CO (24.1%)
  • St. Louis, MO (22.3%)

Homebuyers, who were able to purchase their home over the same five-year period and lock in their housing costs, were able to grow their net worth as home values have increased and their mortgage balances have gone down.

Know Your Options

Perhaps you have already saved enough to buy your first home. HousingWirereported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. 

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

According to Freddie Mac:

“Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 to 10%. And new 3% down financing options for qualified borrowers could mean a down payment as little as $6,000 for a $200,000 home.”

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

 

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