Rent or Buy: THAT is the question!
Regular followers of this blog know that we've been preaching the many benefits to both buyers and sellers of the continued low rates, as well as heavy buyer demand. Well, another question we frequently hear is wouldn't it be just as good an idea to rent as to buy? Some folks are feeling that they'll be better able to buy if they wait awhile, while others (some, at least) erroneously think they cannot afford to buy a home, and thus, must rent. Well, I've got news for you: Renting may have its place, but it certainly doesn't take the place of owning your own home!
So why is buying a better deal than renting? Well, there are several reasons, given the recent and present markets.
First, actual rents have skyrocketed over the past several months. In Marin, for example, average rents are up 10% over the same time a year ago (it's up 16% in San Francisco) and the vacancy rate is down to 2.8%, the lowest its been since 2008.
Second, available rental units are growing scarcer by the day. There were many fewer built in the past few years, so the normal rental demand, further increased by people who've lost houses to foreclosure or short sale, has made the inventory very tight. As with any commodity, when supply drops and demand rises, the costs increase. So, too with rentals.
Third, a new dot-com boom is beginning, fueled by recent and pending IPO's that will lead to younger tech millionaires to jump into the market. More competition for a scarce rental stock.
So, what exactly do you do? You take a serious look at the market and buy! Consider the following example for buying vs renting. It is about as illustrative as any comparison can be. Assuming a 5/1 adjustable rate mortgage after 20% down, a 3-bedroom, 2.5-
bathroom option with a two-car garage.
• Option 1: Rent a 1,350-square-foot home for $3,300 a month.
• Option 2: Purchase a 1,600-square-foot home (list price: $979,000) for $3,197.35 a month. That's over $100 every month that stays in your pocket if you buy instead of rent! Covers dinner out for a night, or put it away until something grabs you that you feel you just can't do without. Best of all, while owning, you're building equity AND getting a tax deduction that's pretty substantial. Renting won't do any of that.
So, how do you get the jump on other buyers seeking a home in the current inventory-starved market? Simple! Call either of us and let us do the heavy lifting! Peter: (415) 279-6466 or Jane: (415) 531-4091. Pack your bags!