These studies were based on a home-buyer being able to secure a 3.5% mortgage rate, were in the 25% tax bracket and were able to put a down payment of 20%. Any change in these factors, such as having a higher mortgage rate, a lower tax bracket and selling sooner could significantly change the outcome. With a mortgage rate of 4.5%, being in the 15% tax rate and only a 3 year window, the situation changes once again and it is 28% cheaper to rent than to buy in the Bay Area. So for people who are willing to stay put for a few years, buying may have become a better deal than renting in many areas.
There are of course many things to weigh and consider. On the buying side, historically low interest rates make buying more possible than in previous years. You need to take into account coming up with a down payment, closing costs, mortgage payments, property taxes, utilities and maintenance. Owning has the advantage of building equity, being able to paint and remodel as you please, and if you have a fixed rate mortgage, a steady and known payment for many years.
On the renting side, things to consider are â€“ security deposit, and renters insurance and ever possible rent increases. Rents nationally have risen 4.8% as of September. However, renting has advantages of having flexibility in the event you need to relocate, and you are not responsible for repairs and maintenance.
Even if it is only a possibility â€“ the question begs to be asked. Should you really buy a home? The best place to start would be with your preferred local bank, or credit union. Find a loan officer that you are comfortable with. They can help you crunch some numbers and go over your finances to see if buying makes sense for you. How about purchasing an investment property for rental income? Rents are outpacing home price increases in many areas. A great resource for this type of information is your San Ramon local Realtor Mona Koussa.