Why Renting can beat Buying in Today’s Economy
Many people think of renting an apartment as a short term thing on the way to buying a place of their own, with many outdated myths about renting – like you can’t own a pet, for example – putting some off the idea for renting as they begin to think about starting a family. However, in today’s economy, there are a number of advantages of renting over buying which should be carefully considered before taking the plunge with a deposit.
In Dallas, the median home price comes in at a steep $188,000, meaning that those in low income employment may struggle to get a foot on the property ladder before getting married, having babies or even reaching their thirties. Yet should you give up on the idea of ownership, at least for now, you can find a gorgeous apartment to suit your needs and, best of all, allow you to move out of your parents’ basement!
Advantage 1 – Security
Buying a home has long been a part of the American Dream, in part due to the security having your very own roof over your head can bring. Yet unless you can afford to buy outright (lucky you!) purchasing a home, and the accompanying mortgage, is by no means a surefire way to gain security. In 2013, total foreclosure filings for the USA fell to 1.36 million properties which, although the lowest level since 2007, is still a frightening figure for anyone considering buying a home. Of course, in the event that you can’t meet the repayments there are things you can do to save your home in the short term, but if repossession becomes the only solution you can lose not only your deposit but everything you have paid into the home as well. With renting, the worst that can happen is eviction and loss of your (much lower) deposit – owning doesn’t seem so secure now, does it?
Advantage 2 – Cost
Another myth often expounded by the buying over renting brigade is that buying costs a lot less than renting following the initial deposit. However, according to Deutsche Bank, this is no longer true for 20 large metropolitan areas in the United States. As financial recovery continues to grow, house prices are going up and interest rates on mortgages are beginning to stabilize – meaning that, unlike during the financial crisis, renting is becoming cheaper on a monthly basis than buying. Even if buying remains a key target for you, this means that renting in the short term will allow you to save up a good deposit for a home of your own without having to worry about aforementioned issues such as repossession. The best way to do this is by renting an apartment which is perhaps a little less luxurious than you first had in mind, but offers cheaper monthly rent – the savings can be placed into a savings account and allowed to build up until you reach your 20 per cent deposit total.
Advantage 3 – Landlords
We’ve all heard stories of “landlords from Hell” who fail to fix up problems, blame tenants for existing damage and withhold deposits when the letting period comes to an end. However, while the media may wish to portray all landlords in this light, the truth is that very few are actually like this in practice. If you own your own home, any issues – such as your boiler breaking down or your roof needing repaired – fall to you, meaning you not only have to organize the work but have to pay for it out of your own pocket. Renting, on the other hand, means your landlord has to cover the cost and ensure work is completed to a high standard. Not only does this make good financial sense for those who struggle to save up an emergency fund but it cuts down on a lot of everyday stresses homeowners face. It is advisable to check that your landlord has landlord property insurance before signing a tenancy agreement because we all know accidents can happen and it’s better to be safe than sorry!
With the USA well on its way to full economic recovery and the housing market hotting up, those on the fence about renting should examine their finances and consider taking the plunge.
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