It’s a question many adults ask themselves at least once in their lifetimes – is it better to buy a house, or should I keep renting? There are many personal factors that can affect this decision, such as career and home life stability, financial means and savings, and the length of time you’d like to stay in a given area. There are also a few factors that apply across the board.
For starters, the area in which you would like to live and the market there affect the cost-effectiveness of buying versus renting a home. The cost of buying should also be weighed against potential post-purchase costs, such as home improvement and maintenance (and whether or not you are interested in or have time to do such projects yourself, or plan to hire someone to do the work).
Here are a few questions to help you put these factors into perspective.
Are you currently in a stable career, or did you just start a new job, are planning to start a new job, or recently lost your job? If you can answer yes to the first one, then buying is a better choice. If you answer yes to any of the three latter questions, then your work life may be too unstable right now to take on substantial financial responsibility.
Did you just get married or have a baby, or are you planning to have a baby soon? If you can answer yes to any of these, you may want to wait a little while before signing the dotted line. Big life changes such as these can create extra stress. Going through the process of buying a home might be too much to add to a plate already full of new adjustments; it’s better to buy a new home once you’ve had some time to adjust to a new life situation.
Are you dedicated to staying in a chosen area for at least five years, or are you contemplating trying out another location soon? If you are ready to stay put, then buying is an excellent option. But if you’re not sure you want to commit to a location, you should wait until you are sure.
Do you have a reserve of savings for potential emergencies, or are you thrifty and handy with household tasks? While there’s no guarantee you’ll need to reroof your home during this decade or that your toilet will need to be replaced, it’s always better to be prepared for the possibility that something could happen to require maintenance and special skills. If you can do it yourself, or if you have the savings to pay someone else to do it for you, then you are probably ready to stand up against any household project that comes your way.
If you have the stability, financial ability, and desire to stay in one place for a little while, then buying should already sound like the best idea.
There are many financial benefits to buying a house right now since home prices are probably as low as they will be for the time to come. At the same time, rent prices have steadily increased in recent years. While renting provides great flexibility for people whose work or home lives are in transition, or who don’t have the financial means to buy, leasing a home space becomes less of a bargain as the cost of a year’s rent comes to outweigh the costs associated with buying a home.
Sure, renters have no maintenance expenses, their utilities are often included in their monthly payments, and those monthly payments help build good credit. But even when it costs the same as renting or slightly more, homeownership comes with the added benefits of equity in your own house, possible tax deductions, and the right of choice.
As a homeowner, you get to decide whether or not to install a Jacuzzi or paint the living room walls blue. It’s up to you whether or not to use nails to hang pictures on the walls. And, based on your time, abilities, and manual dexterity, you choose whether to install a new shower head yourself or call a plumber for help.
Still not quite sure buying is better? Check out The New York Times’ interactive home price calculator and run the numbers yourself.