Interest rates seem to hit a new 30-year low each week. Meanwhile, home sales are steaming ahead, at a record annualized rate of about 4.8 million, which outstrips by more than 10 percent last year’s record-breaking pace.
Unemployment is still near a 30-year low, and consumer optimism is at a record high. No one seems to be paying attention to Asiagate, Monicagate, or any of the other political shenanigans going around in Washington, D.C.
With the way the market is going, you might be thinking that everyone and his or her brother is out in force looking for a home to buy. It may feel that way, especially if a few properties have slipped through your fingers.
In fact, there is an active rental market in the U.S., and the demand for quality rentals is so great, that developers are having a hard time keeping pace. Rents are skyrocketing in certain communities, and renters are fighting tooth and nail for quality rental apartments and homes. Some are bribing leasing agents, others are actively searching the Internet for leads.
Still, the question remains, why would anyone rent, especially if you could own a home for less money and take advantage of the tax benefits offered to homeowners?
Here are some real reasons why people still rent homes. If you find yourself nodding while reading these points, and you’re currently looking for a home to buy, you may want to reconsider your position:
Changing career. While unemployment is at an all-time low, there are a few large companies out there who are laying off some employees, either because of sales slowdowns or mergers. If you’re working for one of these corporations, and you’re on the hit list, looking for a home should be way down on your priority list. By the same token, if you don’t like what you’re doing, and are looking to switch career paths, not just make a lateral move, you may want to rent for awhile. This gives you the flexibility to make a change that’s good for you in the long run, without worrying about making a monthly mortgage payment.
Moving around. If you’re not certain where you want to live, or if you’re considering a career move that would require a physical move, consider renting for six months or a year until you find a place that’s right for you. There’s nothing worse than purchasing a home in the wrong location, then selling at a loss to get out of a bad situation. Once you find a neighborhood you like, consider renting there for six months or so until you know you’ve made the right choice. Although you’ll spend a few bucks on moving costs, it’s far cheaper than paying sales commission twice.
Life changes. Do you know where your personal life is going to be in 5 to 10 years? Are you single? Dating someone? In a committed relationship? Married? Kids on the way? Married with children or an aging parent living with you? When it comes to buying a home, where you are today isn’t nearly as important as where you’ll be in 5 to 10 years. There’s an old joke in real estate that if you’re single and want to get married, you should buy a studio apartment. Within six months of closing, you’ll be in a long-term relationship, wondering where you’re going to live and how you’re going to sell your studio without losing your shirt. The bottom line is, if you aren’t certain where you’re going to be personally in 5 years, you may want to rent until things become a little more clear. (Or, you might want to purchase something big enough for at least two.)
Settling down. Are you ready to settle down and sink some roots into a community? Are you prepared to take the time to find the right home, maintain it, keep abreast of changes in your neighborhood and fight those that might have a negative impact on your home’s value? Homeownership requires work. Renting requires writing a check. If you’re not ready to be a homeowner, rent until you are.
Published: Jun 15, 1998