Press Release

When Deciding Between Renting or Buying, It Pays to See the Big Picture

MORRIS PLAINS, N.J.– Given the uncertain economic times, it is no surprise that consumers are weighing every financial decision very carefully.  One choice individuals seem to be grappling with these days when it comes to real estate is whether it makes better sense to buy or rent.  Both purchasing a home and renting are more affordable than at any time in recent memory.  But which offers the better financial advantage? 

The obvious place to start when comparing buying vs. renting is the monthly payment.  In markets where home prices fell significantly the past few years, those who purchase a home will likely have a lower monthly payment.  In areas where home prices have retained more of their value, individuals may find they can save a few bucks each month by renting.

“Often when people weigh the decision to rent or buy they only look at the monthly costs,” said James M. Weichert, president and founder of Weichert, Realtors. “But to accurately compare each option you need to consider both your short- and long-term plans.  Are you planning to stay in the same place for a while?  Do you eventually hope to own a home?  The answers to these questions can greatly affect the financial impact of your decision.”

For those planning to stay put for a few years, buying a home may prove to be more financially rewarding than renting.  That is because those who purchase a home, particularly when prices are near the bottom of the market like they are today, can benefit from home price appreciation.  This can provide buyers thousands of dollars in additional personal equity that renters simply can’t capitalize on when real estate values increase.

Another factor to consider is the ability to secure a fixed monthly cost.  Rent typically rises a few percent annually so those who rent will likely see their housing expenses rise each year.  On the other hand, individuals who purchase a home with a 30-year fixed mortgage can count on having the same monthly payment over the course of the loan. So even if renting a property might cost a few dollars less each month initially, over the course of several years it could actually end up being more expensive than buying a similar property. 

When judging the financial merit of renting compared to buying, you should also consider how your money is working for you.  While all the rent a tenant pays goes directly to the landlord, homeowners get to recoup some of their monthly expenses.  Each month a portion of your mortgage payment is used to reduce the principle you owe and increase your equity in the home. This makes paying the mortgage each month similar to a forced savings plan.  And because homeowners can take advantage of tax deductions for property tax and mortgage interest, they can get back even more of their monthly housing expenses. 

With interest rates the lowest they have been in 50 years and with the typical starter home costing $40,000 less than it did three years ago, according to the National Association of Realtors, perhaps the biggest factor to consider is whether or not you ever hope to be a homeowner.  Those who can afford to buy now and wish to own a home down the road may likely cost themselves tens of thousands of dollars by waiting because home prices and interest rates are expected to rise in the future. 

“Today’s market not only gives individuals who choose to buy a financial advantage over renting, it also allows them to enjoy the many intangible elements of homeownership at a more affordable cost than ever before,” added Weichert.

In some markets, renting may be a more financially attractive option for the short term.  But over the long haul, homeownership offers advantages that simply can’t be attained through renting. Even when you factor in the additional maintenance expenses associated with owning a home, those who buy seem to come out ahead in the big picture.

Weichert has nearly 18,000 sales associates in approximately 500 company-owned and franchised sales offices in key markets throughout the U.S.  A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance.  For more information, Weichert's customer service center can be reached at 1-800-USA-SOLD or at Weichert's Web site, www.weichert.com.  Each Weichert franchised office is independently owned and operated.