The debate surrounding whether to buy or rent is not likely to end any time soon. Both sides of the divide claim some very valid points, which are difficult to ignore. If you find yourself on one side or the other of this argument, know that the opposite side has equally strong feelings about their position.
However, one thing that is pushing the argument in favor of the renting party is the cost of housing. In some markets in the United States, property prices have raced so far ahead of renting rates that it makes more sense to rent than to own. But this argument goes much deeper than this, as Lindsay Guion, Founder and CEO of GUION PARTNERS INC. explains.
Make Sure the Math Checks Out
Just because property prices are rising does not mean it makes sense to rent. In some markets, property prices going up is a good thing for homeowners and a bad thing for renters. Before choosing to rent because of rising property prices, first, make sure the math checks out. Some of the costs you need to look out for include one-time non-equity costs like mortgage origination fees, closing costs, and legal fees. You also need to factor in ongoing annual costs related to owning a home. If these costs combined are higher than what you would rent a similar home for, then it makes sense to rent. If the costs are lower, you may benefit more from buying.
Factor in All Angles
A decision of whether to buy or rent goes beyond financials. If you live in a market where property rates are skyrocketing, using purely financial motives to rent may not be enough, says Lindsay Guion. Besides financials, other factors that you need to consider are your personal, social, and professional circumstances. For example, if you anticipate a job change that may involve relocating, it makes no sense to take on a mortgage without a clear indication of how your new job will work out. Also, if you just started a family, transitioning from renting to buying, or buying to renting may not be the best move. Before transitioning, take time to ensure all angles of your life favor the decision you are about to make.
If in Doubt, Rent
Although you may do all the math and consider all the angles, you may still feel indecisive about what to do. In such a case, it is best to rent and wait for that moment of conviction to come. You do not want to decide to buy a home and then three years later, change your mind and offload your home. In such a case, you would end up losing money. Lindsay Guion recommends you wait out the uncertainty while renting. In this way, you know you can make changes to your life quickly without the complexity of managing a mortgage. If you already own a home, consider either staying in your home or moving to a rental that meets your needs better as you clarify your next move.
The Bottom Line According to Lindsay Guion
Renting versus buying is not always an easy choice to make. However, you can take the right steps to determine if one or the other is a better option for you. Remember that there will always be renters and buyers, and both have their reasons for picking the option they have. The same should go for you, says Lindsay Guion – the choice you make should reflect your personal preferences and circumstances, and not those of others whose decisions have worked out well for them.