To Buy or not to Buy?
The decision whether to buy or rent a home may have long-term implications.
Please refer to our transcription below if it is easier and/or more convenient for you:
Whether to buy or to rent your home may depend on four important questions:
- Where do you want to buy? In many areas you may find that housing prices are affordable. The housing affordability index shows 74% of families can afford a home.
- How long do you plan to own the home? Transaction costs take time to recoup, so the decision to buy improves with a longer time horizon. On average, if you plan to stay in the home for five years or more, consider buying.
- What percentage of your income will go toward payments? As a rule of thumb, you should consider spending less than a third of your income on housing. A fourth of your income may be an even better ratio.
- What is the price to rent ratio in the neighborhood? This ratio is the home price divided by the annual rent. A good ratio is below 15. A $300,000 home that rents for $2500 a month, or $30,000 a year, has a ratio of 10, which means it may make more sense to buy. One study found that buying a home is more affordable than renting in 80% of major cities.
To buy or not to buy is an important question. Call today and let’s talk about it.