Should I Rent or Buy a Home?
You can save hundreds of dollars every month and thousands of dollars every year if you chose to buy a home instead of renting! Of course, it depends on real estate market you are in, but buying a home in Minnesota makes more financial sense than renting.
Majority of us always struggle to decide whether to rent or buy a home, especially after recent housing market crisis, but don’t let the monsters of the past stop you!
Housing Market Recovery
Twin Cities real estate market is improving and gaining back the value that was lost during the last couple of years. Let’s look at some numbers that were provided by Minneapolis Area Association of Realtors:
- Twin Cities home buyers are now more motivated than ever before in the past 10 years
- New listings were up 24% over last July
- Non bank new listings 55.7%
- Foreclosures and short sale listings down 31.2% and 42.1% respectively
- Closed sales were up 17.7% since July 2012 which is the highest closed sales count since June 2006!
- Interest rates have stabilized around 4.5%.
- Inventory dropped 13% since July of 2012
- Median home sales price is $208,747 and is up 17.2% since last year
These signs of housing market recovery increased demand and resulted in multiple offer situations and increased buyer competition. You can’t look at current housing market through 2011 goggles! It is improving and it is going in the right direction.
Benefits of Buying a Home
The decision to buy a home can be tricky. Not only is it a big commitment, but it is also a change of a lifestyle. Buying a home is a very emotional and personal decision. It can scare those who love their freedom and don’t like long term financial commitments. On the other hand, it can appeal to those who love their stability and routine.
Regardless of what type of a person you are, homeownership has a lot of benefits. Here are some of the reasons why buying is better than renting:
- Equity. When you rent, your monthly payment goes to your landlord. When you buy a house, portion of your payment goes to your principal and helps you build equity!
- Appreciation. Yes, we all heard about recent housing crisis and its horror stories…but historically, home values do appreciate over a period of time.
- Tax incentives and deductions!
- Lower monthly bills and more savings. As a homeowner, you can really cut down your monthly costs by making your house more energy efficient and green. Homeownership also forces you to save and be smarter about your money! A lot of homeowners try to save as much as they can so that they can pay off their mortgage sooner.
- It is your home, there is no landlord to kick you out!
- Remodel, paint, customize, do what you want!
- Fixed mortgage payments will never go up, rent can!
- Have all the pets you’ve ever dreamed of and no landlord to deal with!
- Ability to make extra income by renting a room or two to your friends or family!
- Stability and pride of homeownership!
There are a few things that will affect whether or not you should rent or buy a home. It is a big step, so make sure you do all the research before you dive into it.