I recently came across an interesting chart in Boston Magazine comparing the average sale price of a home in all Massachusetts Cities and Towns from 2009-2010, 2005(the peak)-2010 and also from 2000-20010. The chart was complied by information provided by one of the industry leaders in real estate records and data , The Warren Group.
While the intent was to show which towns hold their value better than others, it led me to another hot topic of late "Are you better off renting than owning?". As recently as September, 2010 Time Magazine had a cover story entitled "Rethinking Homeownership".
As a Realtor, I too am guilty of tossing around the same old tired lines like "why pay your landlords mortgage" and "the tax deductions alone make it worth buying". The hard core resisters respond with the timeless "yeah, but when something breaks I can just call the landlord" and "look at all of the foreclosures going on, I don't want to get into that situation".
The fact of the matter is that it does make more financial sense to own a home, but it is not for everyone. Without getting to "deep and Zen like", the prospect of owning a home has changed along with most other aspects of society with the advancements in technology, medicine and travel.
Here are some example of why the decision is a little more difficult today than in years past.
- As recently as 20 years ago, relocating your family to another State meant considerable more change that it seems to today. Your best chance of keeping in touch with people was an occasional phone call and maybe coming back for a visit every year or so. Now, I know more about the current events of my friends in Hawaii than I do about my next door neighbors.
- Lets face it.... people are living longer today with all of the marvels of medicine. I have more clients than ever looking for homes with in-law apartments or trying to find 2-3 family homes to adapt to extended family situations.
- The number of short sales and foreclosures are obviously creating a demand for rentals. As the supply and demand theory continues to kick in, the cost of buying may far out way the appeal of renting.
The decision to buy or rent needs to be a more thoughtful process taking into consideration not only your current financial situation and lifestyle, but your future goals and intentions. As the chart shows short term ownership will leave you more vulnerable to the ups and downs of the market but over time it has proven to be a good investment if you let the equity build. Simply put if you think you will be moving frequently for any number of reasons, renting is probably the best option. If those same reasons indicate you should base yourself in a specific area or community for the foreseeable future, buying seems to make more sense. It is a choice that needs to be made on a case by case basis and not dictated to you by anyone.