In Southern California’s red hot housing market, figuring out whether to buy or rent is a decision many are trying to make. And with 35 of the nation’s top 50 metros in highest median rent coming from California*, it complicates things, as historically renting has been a good short-term choice in expensive real estate markets. So what to do when it’s almost as expensive to rent as is it to buy? With each option comes advantages and disadvantages, so let’s review…
Protect Yourself from Rising Rent Costs
No more nail biting at the end of your lease, wondering how much your landlord is raising the rent. In L.A. and Orange counties, rents have increased on average $500 and $355 a month respectively in the last seven years**, with no indication of slowing down. Having a mortgage means more stability in your housing costs so your promotion or pay raise doesn’t all go to your rent increase. And predictable housing costs help you plan for the future, like saving for emergencies, planning that Cabo vacation, or buying a new car.
Mucho Tax Benefits
Buying a home means you get some serious tax write-offs = more of your money in your pocket. You can claim mortgage interest on your tax filing, along with property taxes and potentially PMI (private mortgage insurance). Check with a tax professional to determine your potential savings. And while overall housing costs are somewhat higher on average than renting, this can be offset by tax savings.
Your Digs, Your Way
One of the best things about owning a home is that it’s all yours. No more asking your landlord if you can paint your living room. Want to to install that sweet chandelier you love at West Elm? No problem. Personalize your home so it reflects your personality and is exactly how you want to live. And purchasing a brand-new home is even better, because you can customize before you move in, making your new pad turnkey when you cross the threshold for the first time. Buying new can also save you money in the long run, especially if you’re considering an older resale home that needs a lot of costly renovation work. The downside to this is the repairs are all yours, too. That means no more simply calling your landlord to have that faucet leak fixed, so budgeting for home repairs becomes a must.
A home purchase means settling down for the long haul. This can be a great thing, especially if you’ve fallen in love with a particular neighborhood, plan to start a family, or are looking for a place for your family to grow. But if you’re hoping for that big promotion in Chicago or just don’t feel like planting roots for a number of years, you’re better off renting for the time being until your lifestyle needs change.
Sound Financial Decision
Even with normal market fluctuations, real estate has demonstrated an impressive rate of appreciation over time. If you’re buying for the long term (which you should), market ups and downs don’t matter all that much. Your equity that builds over the years will create a serious nest egg and a source of financial security for years to come.
Speaking of dollars and cents, our Home Advisors would love to discuss the benefits of owning your own home so please stop by one of our Welcome Centers to discuss your options!