Financially, buying is overall a better choice. But there are some disadvantages to consider as well.
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I get a lot of questions from first-time homebuyers: “We’re renting now, and we don’t know if we should buy—what are the advantages and disadvantages of buying versus renting?”
I get a lot of questions from first-time homebuyers: “We’re renting now, and we don’t know if we should buy—what are the advantages and disadvantages of buying versus renting?”
I’ll tell you: it depends on the market. In an appreciating market, financially it makes more sense to buy. You’re capturing the appreciation on a home every year when you buy. Here in Columbia, our homes tend to appreciate by about 4% every year. It’s like having a savings account, assuming there’s no decline in home values, of course.
It depends on the market.
Also consider the tax advantages of writing off the mortgage interest. Usually the payments are less when you buy versus when you rent.
However, there are disadvantages—if the market depreciates, you lose. In the last house I bought in 2007 at the peak of the market, if I had rented for a couple years, I could have purchased that home for 25% less. That was a big bubble that burst.
Renters are able to pack up and leave after the lease is up, so if you’re not sure how long you want to live in an area, you might want to rent. If you buy a house and then sell it a year later, your closing costs could eat up all of your appreciation.
Overall, financially, if you know you’re going to live in an area for awhile, buying is the better choice (bearing in mind maintenance costs).
If you have any other questions or would like to discuss this further, feel free to call, email, or direct message us on Facebook.
