In the News: Rent, Don’t Buy!
Despite the common idea that owning a home is the American dream, it’s turned out to be a nightmare for millions of homeowners. But some people have always felt it’s better to rent than buy, and financial advice websites and television shows are echoing that alternative.
Moneywatch.com recently reported on why and where people should rent, rather than buy a home. A few examples of why they should rent:
- They are either unemployed or think they might be soon;
- Their credit has been hurt by the economic downturn, and they’re not likely to get a favorable mortgage;
- They can’t afford the extra expenses of home ownership, like property maintenance, emergency repairs, and property taxes;
- They aren’t ready for the responsibilities of home ownership;
- They are not planning on staying in one geographic location;
- They're in a state of flux with career, partner, children, or finances;
- It’s cheaper to rent than to buy.
According to Moneywatch.com, and based on a formula developed by Rent.com, here are the top five cities where it’s better to rent than to buy:
- San Francisco: it can cost twice as much to own as to rent in the Bay City.
- New York City: It's notoriously expensive to live anywhere in NYC, but rents are stabilizing.
- Honolulu: Prices for a 3 BR/2 BA home in a sample gated community are around $540,000. Renting is a better deal at $1,875/month.
- Tucson: Because Tucson’s housing boom led to overbuilding, new homes for rent are plentiful. More supply than demand means bargains for renters: as little as $740--$1,270 per month for a single family home.
- Los Angeles: From foreclosures on $790,000 Beverly Hills condos to lower-level 3 BR/2BA homes at $300,000, the housing bust hit the area hard. Renting in the city can cost as little as $1,000, while near the beach might be as much as $6,700. Prices are everywhere in between, and depend completely on the neighborhood.
This is good news for landlords; as it becomes more acceptable to be “just” a renter, rather than a homeowner, fewer people will feel the pressure to own and will do what you’re hoping: call you to lease your vacant rental property!