Are you in a quandary whether to rent or to buy a home? Good news! According to experts at Trulia, an unbiased real estate search engine, buying a home is more affordable for most consumers than renting a similar property in an equivalent neighborhood in 98 out of 100 U.S. cities including Jacksonville and Northeast Florida. Only Honolulu and San Francisco buck the trend.
There are many reasons that home buying is more cost-effective than renting. Home prices are stable and mortgage interest rates are at historically low levels as rental prices continue to rise.
In Northeast Florida, the cost to rent exceeds the cost of homeownership. The real estate research firm Reis Inc. reports apartment rents in the U.S. climbed the most in nearly five years in the second quarter of 2012 as shrinking vacancies allowed landlords to charge more.
The American Dream
Homeownership is at the core of the American Dream. According to the latest quarterly Prudential Real Estate Outlook Survey released by Brookfield Real Estate and Relocation Affiliates Inc., owner of the Prudential Real Estate franchise network, eight out of 10 survey respondents described homeownership as very important.
“There is growing optimism about the local real estate market and, with rising rental costs, many recognize now is a good time to buy,” said Prudential Network Realty Founder, President and CEO Linda H. Sherrer. “Along with the pride of homeownership, buying a home makes it possible to realize the advantage of tax write-offs.”
Are you better off renting or buying? The answer depends on many factors including how fast prices and rents rise and how long you stay in your home. There are many online tools available to help consumers arrive at an answer and calculate the costs of renting versus buying a home.
For this article, we used a calculator available from Wells Fargo Home Mortgage and compared the cost to rent at $1,200 per month versus the cost to purchase a home priced at $250,000. The inputs included a 3 percent appreciation or depreciation rate, a 15 percent income tax rate and a 30-year loan for $225,000. In addition to the monthly expenses, the calculator estimates the tax savings you might realize from deducting mortgage interest and the equity that you earn in your home over the time you own it. To access the calculator, visit www.PrudentialNetworkRealty.com.
Our results show it is much more advantageous to buy than rent because of the potential tax savings. The calculator’s cost-benefit analysis shows that owning will cost $479,163 less than renting over the 30 years in today’s dollars. These amounts are estimates, and the actual costs may be higher or lower.
“There are good reasons for some people to rent,” said Christy Budnick, executive vice president of residential real estate, Prudential Network Realty. “But owning a home can be a smart decision over the long term for both you and your community. There are substantial economic ripple effects when a single home is bought or sold. For example, when a person buys a home, they often hire others to do small renovation projects such as painting, installing wood floors or landscaping. These projects put additional dollars in the economy and create jobs.”
Impact on the Community
When you buy a home, you are investing in your community and its economy. Homeownership and real estate sales energize Northeast Florida’s economy. There are expenditures on both sides of a real estate transaction when someone buys or sells a home. Both buyers and sellers hire service professionals, including Realtors, attorneys, home inspectors and appraisers. Money also goes to the title company and local, county and state government taxing agencies. Real estate transactions have a profound economic impact on the local economy. To learn more about the value of homeownership, visit www.PrudentialNetworkRealty.com.
While there are many good reasons to buy a home, some renters may not be in a position to buy. Rising rent prices make it harder for people to save for a down payment. If you do not qualify, a Non Profit Credit Counseling Agency can provide credit counseling and financial education services.
Turn to a connected Realtor
For those looking to take advantage of the best opportunities in the market, Prudential Network Realty is the most dynamic and respected real estate firm in Northeast Florida. The company’s associates are experienced, productive and results-oriented. They have the expertise and talent to make your real estate transaction go as smoothly as possible and achieve your goals.
Connect with the best by visiting www.PrudentialNetworkRealty.com.
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