The age-old question that continues to plague homeowners and tenants alike: Is it better to rent or own? Current homeowners say own, but many disagree. A recent Lending Tree survey showed that 67% of current homeowners prefer owning to renting. Fifteen percent of homeowners believe their renting days were easier, while 18% are neutral.
So why aren’t all homeowners happy with owning? Several arguments dominate, but each side has its pros and cons.
Owning real estate–whether for living, working, or leasing–is an investment. And just like any investment, property ownership can be both difficult and incredibly rewarding.
The Aramco Group lenders make a few great points about the benefits of owning over renting. Some of the major points are as follows:
- Equity building – as you pay off your principal, you are building a long-term financial investment that you will have if and when you ever want to sell
- Fixed-rate payments – most mortgages are on fixed interest rates, meaning your payments will not increase year-to-year
- Control – you have the power to modify and improve your property to suit your needs and the needs of your family
- Stability – not only does building equity provide you with financial stability, but a house ties you to a specific location, where you can experience the long-term comfort of a neighborhood community
Owning a home comes with cautions, as the InCharge debt experts list alongside the pros:
- Maintenance – you are responsible for the upkeep of your home, including routine maintenance and unexpected repairs
- Cost – between mortgage payments, property taxes, HOA and emergency expenses, the costs can really pile up; most importantly, you must be able to afford a down payment
- Long-term commitment – once you’re tied to your community–not to mention your mortgage–it can be extremely difficult to suddenly pick up and leave
For some people, renting is their only option. For others, renting may be more appealing than buying even when they have the means to buy.
The Fiscal Fizzle finance blog provides some great pointers on the benefits of renting over buying:
- Flexibility – rental contracts usually come with a 12-month lease, but some are on a month-to-month basis, which gives you maximum flexibility to relocate as soon as you want
- Cost – renting a home usually means cheaper monthly payments, in addition to having maintenance expenses covered by the landlord
- Less risk – because renting is not an investment, there is nothing to lose if the market dips or the property depreciates
InCharge.org highlights key areas in which renting loses out to buying:
- No equity – the major problem with renting is that you will have no equity to show for it, no matter how long you rent
- Little control – you are at the mercy of increasing rental rates, contractual restrictions, and your landlord’s plans for the building
- No tax incentives – unlike mortgages, the IRS does not provide tax exemptions for rental payments
Whichever side of the issue you find yourself on, just remember these few things about home ownership:
- Not everyone is suited for home ownership
- Home ownership requires a stable income and smart financing
- Like any investment, home ownership can return long-term financial gain
Having a knowledgeable and experienced real estate broker on your side helps protect your interests and ensure you make the best possible decisions. We are dedicated to keeping on top of the real estate market and keeping you informed of changes. You can rest easily knowing you made a well-informed decision based on experience and insight into the Concord California market.