Renting a home is clearly better than buying in much of US
phys.org
phys.org
I've gone from renting to owning to renting and back to owning. Depending on what factors you consider to be important, then one may be better than the other or vice versa. For example, one of my periods of renting allowed me to live in a city where my work, my son's school, and nearly everything I did was within a 20 minute walking radius. I certainly didn't build as much wealth as owning, but owning wasn't an option in that area. Therefore renting was "better" by that measure.
Expanding on this, if you want an unorthodox housing situation or have a non-standard family unit, renting can either be prohibitively expensive or impossible.
For instance, there's the Tiny House movement which all but requires you to own your home in most areas. On the other end of the spectrum, larger families (4 or more children) will often find that rental units cannot accommodate them because of local regulation regarding # of rooms per occupant
Here in Raleigh, North Carolina suburbs, for the specific place I own, I'm definitely spending less on my principle+interest+insurance+taxes+HOA+maintenance than renting.
This is far from the case for everyone, even in the same area, especially depending on what is being rented, and if the total rent is being split by 2+ people. (I live alone in a 2BR residence.)
How long have you lived there, and how old is the property? And how long will you own? Selling a home is incredibly expensive.
I'll declare by bias here too: I am a realtor in WA, near the Oregon state line, and I continue to believe that real estate is a fantastic wealth-building activity that should be at least considered when one is evaluating their overall portfolio. I feel blessed (and I don't use that term lightly) to live in an area with a very high % of home ownership, even though local incomes are relatively low. I fear a world where home ownership is consolidated in the hands of investors, as has happened and continues to happen in high-cost areas (which I do not believe is a coincidence).
Some thoughts on home ownership that I’ve had:
- Oftentimes furniture and decoration does a lot to make a low end rental feel high end. Check Craigslist in affluent areas. Or just splurge.
- It never hurts to ask your landlord if you can upgrade something at your own cost or by sharing the cost. Don’t just settle for white walls and junk appliances if you plan to stay a long time.
- You can make smaller spaces work better by using vertical space. Mount stuff on the wall. Install closet organization. Get permission if you have to, but also a lost deposit is still cheaper than buying/selling a home. Anything you can do to make you tolerate your cheap rental enough for it to be more long term.
- Don’t be a child, share bathrooms. More bathrooms are a waste of rental money and square footage.
- In the same spirit as “furnishings make the luxury,” don’t bother with high end apartments. If you want that kind of thing I think it’s better to buy. High end apartments are always overpriced and “fake nice.”
- A lot of “stainless steel appliances” are not as high end as you think. See that that silver Frigidaire dishwasher with the black plastic top? Yeah that thing costs like two hundred bucks. It’s no Bosch or Miele.
- Ultimately owning a home isn’t just a financial decision. It can also involve your level of control and power over your situation. Landlords are allowed to enter with 24 hours notice, for that reason alone a lot of people would rather own (but that’s also not a big deal, and certainly not as bad as having to fix everything yourself on your dime).
- There are often features available to purchased homes that simply aren’t common or don’t exist in the rental world. This most certainly varies by market.
- Consider the government subsidies and encouragements of home ownership but don’t overemphasize them, and certainly don’t make assumptions on what they are. People seem to assume that getting married and getting a house is a huge tax break - it’s not.
- Property tax abatements sound great but often just make up for local home prices being lower than construction costs.
- Consider whether job mobility will be impacted by home ownership. I don’t think anyone who is career minded should be tied down to a particular locality until they’ve got at least 5 years industry experience.
- Entire suburbs, towns, neighborhoods can go under. As a renter none of this is your problem. But it’s a very real risk of home ownership. Is Austin or Denver any more safe from future atrophy than Detroit or Cleveland?
If anything, being to stay or move whenever I want is reason enough to purchase. When times are good they’ll raise the rent. When times are bad you’re on your own.
If someone won’t buy your home for the price you need to break even, you can’t move. That’s what happens in “the bad times.” Just when you might need some job mobility (like if you’re laid off) you’re stuck in your home that could take months to sell, and you’ll eat closing costs and fees. Or you have to eat a long commute, where a renter can just move within a year with essentially no financial hit.
I didn’t really point out overall economic outlooks for this very reason. If you can’t pay your bills whether you rent or buy you’re screwed either way.
Rents can go up but so can property taxes, especially when your home value increases due to a hot market. I don’t think price movement alone is a good reason to choose renting or buying. There are certainly exceptional markets but for most people it doesn’t play in.
As far as upgrading, it’s all about your tolerance. I’m not saying to install a $10,000 kitchen renovation in a rental. For some people it might be installing a paper towel holder or under-cabinet lighting. Maybe even replacing cheap boob light fixtures with a nicer fixture (and you can easily revert that when you leave and take your nice fixture with you).
There’s a huge rent friendly decorating trend going on often involving landlord friendly things like stick-on backsplashes and stick-on accent walls and murals. Paint of course is another one.
If you find the perfect apartment and the only thing wrong with it is that the stove is a 20 year old Hotpoint piece of trash a renter could even consider risking that $800 investment to get a new stove. Ultimately even if you completely lose the stove at the end of your lease that’s only $66 a month. If your nice stove saves you one restaurant trip a month it pays itself off.
And while we all use the bathroom multiple times per day, most of the day it sits there unused.
It’s not hard to stagger morning bathroom use with your significant other or family. I’m not saying that a family of six would want to share one bathroom. But when I see people insisting on one person per bathroom plus a powder room, that’s excessive.
Right now, during the pandemic, it's clear a landlord renting out multiple properties is in a terrible place. However, as eviction moratoriums start to lift, it's an open question to me as to who's living situation is more precarious. If you don't have the money to pay for housing, is living in a bank-owned property and trying to get mortgage deferral better or worse than living in someone's rental property and hoping they don't kick you out? Obviously the ideal case is to own your home free and clear, but many don't have that kind of money.