DON'T ROLL THE DICE ON WHETHER TO BUY OR RENT A HOME IN TENNESSEE

By
Real Estate Agent with Exit Realty, Bob Lamb & Associates

BUY OR RENT DICE     In today's market, there is an influx of people renting versus buying a home.  Many of these same people wonder if now is the time to roll the dice and considering buying a home.  Personally, I don't believe in rolling the dice when the facts are a better basis for making a decision.  Would you like to have an extra $300-$400 in your pocket a month?

     After home prices took a painful belly flop off a steep cliff, thousands of Tennesseans lost their homes to foreclosure.  Many others were in a financially distressed situation and desperately gravitated to short sales as an avenue of selling their home.  As home inventories grew, Tennesseans reluctantly flocked to renting versus home ownership. 

     Currently, there is an unusually high demand of residential home rentals, but the supply of these rentals are dwindling.  Monthly rental rates are climbing higher and higher with no end in sight. Worse, rent money is being tossed out the window versus gaining equity.  Is now the time to buy?

Let us look at the facts:

  • Mortgage rates are at or near historic lows
  • Home prices are incredibly cheap based on historic numbers in Middle Tennessee
  • Distressed property inventories are down
  • Residential properties are at a bargain
  • Home prices have stablized and have shown some steady appreciation

     Personal Investing 101 would suggest that there is not a better time to buy a home.  Afterall, home ownership is a part of your personal investing portfolio.  Given the current market conditions and the inflationary rental rate, the decision should seem obvious. 

     For example, if you bought a 3 bedroom, 2 bath home for $129,000 in Nashville or Murfreesboro, the approximate monthly payment would be $737. The monthly payment is based on the principle, 3.5% interest rate on a 30 year term fixed mortgage including tax and homeowner's insurance. Compare this to the Housing and Urban Developement's "Fair Market Rents" for Rutherford, Davidson and Williamson Counties which is $974 http://www.huduser.org/portal/datasets/fmr/fmrs/FY2012_code/select_Geography.odn  In reality, a single family 3 bedroom, 2 bath home would likely exceed $1100 for most areas.  What could you do with an extra $300-$400 in your pocket a month?  In addition, you would be paying down the principle, gaining equity, and ultimately improving your net worth.

     The question remains, is now the time for YOU to buy a home?

    

Comments (2)

Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Keith, I'd create a little biaed dice - with 5 sides saying 'BUY' and 6th one with a question - 'What's wrong with you, Mr/Mrs. Buyer?'...lol

Aug 23, 2012 03:15 PM
Keith Gunder
Exit Realty, Bob Lamb & Associates - Murfreesboro, TN

Absolutely.

Aug 23, 2012 03:26 PM