Home Buying in Philadelphia>Question Details

Hipwilson, Other/Just Looking in Philadelphia, PA

I have just moved to the Philadelphia area to attend graduate school. Would I be better, in the long run, to rent or purchase a place to live?

Asked by Hipwilson, Philadelphia, PA Thu Aug 9, 2012

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22
Hi Hip,

Just remembered that there are many active programs through various local universities and public/private partnerships that are working to keep grad/post-grad students here working in the area after school. The healthcare, biosciences, and pharmaceutical industries are thriving in this area.
Insurance industry is also huge in Philadelphia.

Depending on your field of study, you may very well end up staying in the area beyond grad school.

In this market, if you can afford to buy where you want to live, the numbers will probably show that it is wise to buy now vs. rent.

All the best,
Larry Lichtman, CNE
REALTOR, Property Manager
Your Real Estate Resource For Life
Cell/Text: (267) 254-7994
LarrySellsRealEstate@gmail.com

DJCRE, Inc.
Real Estate Sales & Leasing
Property Management & Insurance
1611 Snyder Avenue
Philadelphia, PA 19145
Office: (215) 271-7070
2 votes Thank Flag Link Thu Aug 9, 2012
Hi Hip,

I would suggest you take advantage of the current Buyer's Market in Philadelphia now before the tide turns again. Prices in most better Philadelphia neighborhoods have certainly stabilized now. In some areas, median prices have increased and homeowners have actually seen some recent appreciation in their home values.

With that said, it is a great time to buy. If you decide to relocate in the future, I'm sure I could help you find a good tenant to rent your place. The rental market is very hot in Philly at this time. It has been the busiest, most competitive summer for rentals that I remember in a long time. You will definitely generate positive cash flow above mortgage, taxes and insurance.

Another benefit to purchasing a property vs. renting is the tax benefits. Rent is like flushing your hard earned after-tax money down the drain. When you buy, you have a huge annual mortgage interest deduction, especially for the first five years it usually equals 90-95% of your monthly payments. That could be a dramatic savings for you.

Do you know which neighborhood or area you would like to live? I can certainly assist you in finding a nice home. As a Certified Negotiation Expert, my expertise helps me to negotiate a great deal for my clients. I'd be happy to help you in your search.

Please feel free to contact me to discuss the next step. Have a great weekend.
I look forward to speaking with you soon.

All the best,
Larry Lichtman, CNE
REALTOR, Property Manager
Your Real Estate Resource For Life
Cell/Text: (267) 254-7994
LarrySellsRealEstate@gmail.com

DJCRE, Inc.
Real Estate Sales & Leasing
Property Management & Insurance
1611 Snyder Avenue
Philadelphia, PA 19145
Office: (215) 271-7070
2 votes Thank Flag Link Thu Aug 9, 2012
That is a question I get a lot when I work with residents who are relocating to work at Jefferson Hospital or HUP. A lot of times they do not know the area, they don't know how long they will be here or if they would want to stay here beyond completing their credentials.

If you feel that this area is a place you would like to stay for 3-5 years or more than I would consider buying. If you are not sure than seriously consider renting. At least then you would be able to learn the neighborhoods more and figure out where you would like to buy if you decided you would like to stay in Philly.

Let me know if I can help you further

Carmel Archdekin
Coldwell Banker Preferred
223-225 Market St. Phila PA 19106
215.680.5998
0 votes Thank Flag Link Fri Aug 24, 2012
As soon as you buy something, about 8% of that sale price equity is gone for the approximate cost to sell.

If you know that you can make more than the 8%, then buy. If not, then rent.

Not a perfect formula, but a reliable one.

Remember, the three most important things in real estate, location, location, location!

Good luck,

Fred
Web Reference: http://fredglick.com
0 votes Thank Flag Link Thu Aug 16, 2012
I suggest that right now with interest rates as low as they are and affordability being the best it has been since WWII. I would buy a 3 bedroom home or a multi-unit and rent the extra rooms/units out to other grad students. This would then help you by bringing in some extra cash flow and it might bring down your cost of living expense by having others help pay for your mortgage plus this will give you control over your living environment. With doing this even if you leave the area you have a property that could bring you positive cash flow and a great start in your investment portfolio. Like when Will Rogers said "Buy land—they’re not making any more of it”

Your Real Estate Professional,

Robert Travers
Realtor®
PA Lic No: RS316370
Oh, by the way I'm never too busy for your referrals!

Keller Williams Main Line Realty
720 W. Lancaster Ave
Bryn Mawr Pa 19010
Mobile: (267)257-4051
Ph: (610)520-6599
Of: (610)520-0100
Fax: (610)520-1835

Email: rtravers@kw.com
http://www.househuntinginpa.com
0 votes Thank Flag Link Mon Aug 13, 2012
Nice property available now. Please send me email. or call me. pc4logos@gmail.com
#215-207-1218

PC Chandy
0 votes Thank Flag Link Mon Aug 13, 2012
Hipwilson,

I have something that may actually work for you. Shoot me a quick email: tmorrison@tylerjmorrison.com.

I look forward to hearing from you.

Sincerely,
Tyler J. Morrison
484-533-7111
0 votes Thank Flag Link Sun Aug 12, 2012
Unfortunately there’s no formula or analysis that works for every individual, the decision whether to rent or buy must be made on a case by case basis because the process requires a very subjective weighing of pros and cons. If you are unsure about the stability of your job DO NOT BUY, renting is the only sensible option for you. If you are comfortable with your job stability then the home buying option is on the table. There are calculators and formulas that can help analyze whether it makes more sense to buy or rent in a particular city based on current economic conditions. These are helpful but they don’t factor in all of the subjective elements listed below. The numbers alone are not determinative.

Renting – Pros and Cons

PRO – Renting requires a relatively small initial outlay of money. Most rentals in Philadelphia require only first, last, and security deposit. This is dramatically less that buying a home and the security deposit is returned if the property is left in good condition at move out.
PRO – Renting does not require a long term commitment. Most leases in Philadelphia are for 12 months and then they either automatically renew or terminate.
PRO – Renting allows you the opportunity to familiarize yourself with one or multiple neighborhoods in Philadelphia before making a long term commitment to one.
PRO – Economic and housing markets don’t really affect renters. Rents may go up slightly or down slightly but things like declining home values, under water mortgages and shadow inventory aren’t important to renters.
PRO – Renters don’t have to allocate money for annual repairs.
PRO- Renting a home is a quick process that typically takes 2-3 weeks total.
PRO – Renters don’t pay real estate taxes or worry about real estate tax hikes
CON – Renters have limited control over the property and the condition of the property they live in.
CON – Renters don’t build any equity in a home. The entire monthly payment goes to the landlord.
CON – Renting is not a long term solution for most individuals.
CON – There are no tax deduction benefits for renters

Buying – Pros and Cons

PRO – Buying Real Estate affords the buyer 100% control over the property. If the owner is unhappy with the condition he or she can make alterations as desired.
PRO – Interest rates are historically low.
PRO – When you buy a home some portion of the monthly mortgage payment goes towards equity in the home.
PRO – Buyers are entitled to significant tax deductions for mortgage interest and depreciation.
CON – Buyers must allocate money for annual repairs
CON – Buying a home is a long process compared to renting. The average home purchase takes 30-60 days.
CON – Buying requires a long term commitment. In most cases the buyer should plan on owning the property for 5 years or longer.
CON – Buyers pay real estate taxes and face risk of annual increases

It’s easy to understand the difficulty clients encounter when deciding whether to rent or buy. At the end of the day there’s really no right or wrong answer, only what makes sense for an individual with a specific set of circumstances. Hope this helps!
0 votes Thank Flag Link Sun Aug 12, 2012
I have a house for sale or rent in the Rittenhouse Square area. Area is full of students. At this time it is cheaper to buy my place than rent it. Check it out at Coldwell Bankers Preferred or just google 2220 Manning St., Philadelphia PA 19103. My realtor specializes in the area. Call Phil Cavalcanto at 215-681-6610 and he can help you, even if it is not my place.

Diana
0 votes Thank Flag Link Sat Aug 11, 2012
Hi Carl,
Even though it does not benefit me to say this, if you less than 50% confident that your going to stay in the area then just rent. However if you are even 51% positive that you might stay then there is no better time in history to jump on a home right now.

Between interest rate and home value you would absolutely benefit. Also, because prices are so low, even if that 51% turned to 49% in 2 years, you would not have a very hard time getting out of it and probably end up making a little post-graduate cash.

If you want to site down and talk let me know man. You can call/text me at 267-752-3548 or email me at tom@gosico.com

Cheers,
Tom Sheridan
0 votes Thank Flag Link Fri Aug 10, 2012
If you choose particular areas and stay in a particular price point purchasing can be a benefit right now. All great points are made below do your self a favor and sit down and talk to someone to examine what makes sense for you.

All us agents posted here have a great sense of the growth this city will see in the next 4 years.
0 votes Thank Flag Link Thu Aug 9, 2012
Hi Hipwilson, my colleagues are correct. Although one option is that you don't have to necessarily sell when you move -- you can rent out and hold as an investment property indefinitely. Philadelphia is a much-in-demand rental market.

You don't mention what part of the city you would consider living in, what your budget is or if you have been preapproved for financing if you need it. You also don't mention if you would like high rise, low rise, doorman, etc.

If you would like to sit down in my Rittenhouse Square office and have a no pressure conversation, please let me know.

Eric Axelson, Associate Broker
Kurfiss Sotheby's International Realty
267.507.2287
axelson@kurfiss.com
Web Reference: http://kurfiss.com
0 votes Thank Flag Link Thu Aug 9, 2012
Welcome to Philadelphia.

First of all, consider that renting gives you more freedom, owning gives you more control.

If you are asking about the cost of renting vs. the cost of buying and later selling, it depends on the market when you are ready to sell, the costs of buying and selling, the cost of maintenance, and the monthly payment.

Some rentals are available for less than you would pay for taxes, insurance, and maintenance for a property which you own. On the other hand, with today's low interest rates, some monthly payments are less than the average rental payment for the comparable property.

You can contact me for more specific information about properties in my area in Northwest Philadelphia.
0 votes Thank Flag Link Thu Aug 9, 2012
Hi, Hipwilson.

Welcome to Philadelphia!

To answer your question is not so simple; it really depends on where you want to live. There are some areas of Philadelphia where buying makes a lot more sense than renting, and other areas where the opposite is true.

I personally believe that buying is always better in the long run, due to its financial benefits, but everyone's situation is different; you really have to sit down and run the numbers. If you would like to discuss your options, please feel free to reach out to me.

All of my contact information is below.

Best,
Tim

Timothy M. Garrity | REALTOR®
U S Spaces, Inc. | #RS314897
267-879-2716 - Call & Text
PhillyUrbanLiving@gmail.com
PhillyUrbanLiving.com
0 votes Thank Flag Link Thu Aug 9, 2012
Hello Hipwilson:

The answer to your question is simple. Will you be staying here for the long run? If you are staying for 24 months than renting is more economical. If you feel that you may stay, rent for a year and about nine months in take a look at what is available to purchase.

Philadelphia is a great city, but purchasing binds you here on some level. Is this where you want to be for five or more years?

Ana Barlow
The Barlow Group at Keller Williams Center City
1619 Walnut Street - Fifth Floor
Philadelphia, PA. 19103

anabarlow@gmail.com
267.408.8036
0 votes Thank Flag Link Thu Aug 9, 2012
Please feel free to contact us to discuss your options.
Thank you,
Natalie and Jared
215-839-9223
jared@usspaces.com
jared@phillycondostore.com
0 votes Thank Flag Link Thu Aug 9, 2012
I'll be brief. Rent. UNLESS you know where you will be employed after you graduate. That could change the equation.
0 votes Thank Flag Link Thu Aug 9, 2012
If your all ready in the area I suggest setting up a face to face meeting with a few agents that have responded. To truly evaluate this question which so many are faced with today an agent really needs to hear your full story and your goals. I work with alot of investors and I also work with alot of renters, so as agents we understand the fears and goals of each client. Understanding your situation will help us respond accordingly.

For example if my parents or I bought a home in East Falls during my 5 year architecture program at Philadelphia University, they would have made a very sound investment. 1998-2003 had great returns, almost doubling the value of homes. As we know those days are over so answering your question is much harder.

If you have never purchased a home yet the best research you can do to help you make this decision is explore your closing costs. (an agent or mortgage broker will help) If you buy a $100,000 house today and sell for $105,000 in three years it does not mean you made $5,000. You have to factor in closing costs (transfer tax, realtor fees, home inspections, etc) associated with both the buying and selling and some general number for misc repairs over that life time. Depending on what type of mortgage you obtain also can set where you are when you go to sell.

I am a big fan of buying versus renting but just make sure you do your homework ahead of time. Buying gives you all the control, opens up more options for you to live, to rent our a room and make money, to become a landlord down the road of life and become an important part of the neighborhood you decide to invest in. Its really what feels right for you, feel free to reach out to us agents for an actual meeting.

Thank you,
Scott Maritzer
The S i v e l G R O U P
Prudential Fox & Roach Realtors
Cell: 267-240-1911
Email: Scott.Maritzer@prufoxroach.com


As a trained architect and skilled realtor, let me help you navigate all aspects of owning a home.
0 votes Thank Flag Link Thu Aug 9, 2012
Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide.

The company, which lists for-sale and for-rent information on its site, has released a new analysis of what it calls the "break-even horizon," comparing what it would cost to buy or rent the same home in a number of U.S. markets over time.

The rent-or-buy calculus varies widely depending on where you live.

In the combined Los Angeles and Orange counties, the magic number is 4.3 years, assuming the buyer has made a 20% down payment. Buying wins out after only 1.6 year in the desert community of Banning. But Newport Beach residents must wait 14 years for buying to make more financial sense than renting.

The analysis takes into account a host of factors potential buyers should think about when considering the leap, including the down payment, mortgage and rental payments, buying and selling costs, property taxes, utilities, maintenance costs and tax deductions. The analysis adjusts for inflation and forecasts home value and rental price appreciation.

Zillow senior economist Svenja Gudell said the data should help homeowners get a rough and immediate sense of whether buying makes sense in a particular area in relation to their financial situation.

"For a home buyer out there, it is really tough to get a good grip on the buy-versus-rent decision," Gudell said. Although buying a home is a deeply personal decision, she said, the analysis gives consumers "a sense for 'Am I ready to make this decision?'"

The new take on the classic rent-versus-buy debate comes at a tenuous moment for the housing market. Many analysts believe that a housing bottom has been reached but don't expect a return to the heady days of the real estate bubble. There is already some concern about the strength of the recovery, with home sales slowing in June as inventory remained tight and buyers paid higher prices.

At the same time, rents are rising, housing affordability is at record levels, and mortgage interest rates remain very low. These factors are prompting many renters to consider homeownership.

Stuart Gabriel, director of UCLA's Ziman Center for Real Estate, noted that the main lesson from the subprime mortgage debacle and the housing bust was that homeownership shouldn't be pushed at all costs. Federal policy has been adjusted to support this new point of view.

"One of the things we have learned in recent years is, obviously, house prices don't always go up, and even over the very long term in certain markets homeownership may only offer a minimal return," Gabriel said.

"What we have all learned is to treat homeownership as a bit of a dangerous animal. You know it's not always good, and it's not good for everyone."

Things to consider when buying, particularly in an slowly appreciating market, include how mobile will you be, your financial situation, marital status, career goals and personality, Gabriel said.

Richard Green, director of the USC Lusk Center for Real Estate, added that in many regions buying has become increasingly attractive compared with renting. There are also non-financial reasons for buying.

"I can enjoy living in this house for the rest of my life, and nobody can throw me out of it," he said. "You are consuming something, and you have control over it, and control has some value."

Zillow's analysis, which covered more than 200 metropolitan areas and 7,500 U.S. cities, found that buying is a better financial decision than renting in the Riverside-San Bernardino area if you live in the home for at least two years. That rises to 3.2 years in the area including Oxnard, Thousand Oaks and Ventura.

The San Francisco metropolitan area's break-even score of 5.9 years encompasses a range from two years to 24.3 years.

Fred Yancy, Broker
Crye-Leike Realtors
(678) 799-4663
0 votes Thank Flag Link Thu Aug 9, 2012
If you are going to be there for 4-6 years you would almost assuredly be better off buying then renting. Even if the market were to drop 5% after all expenses you'd spend less buying the renting and honestly having grown up in Philadelphia and having family who lives there, I feel confidant in saying the market in Philly isn't going to drop over the next 4 years it's likely to appreciate 5-10%

I hope you enjoy your time there in graduate school, it's a great city. Our own son attended Drexel, and liked it enough that he's never left.

I've attached a link below on how to find yourself a great buyer broker who can sit down with you and run numbers with you so that you understand why I say it makes more sense to buy than rent.

I also posted a blog today specifically about this here on Trulia with a link to the report Zillow issued last week showing the time it takes to break even when considering buying versus renting and Philadelphia is listed in this report. Click on my profile and then you can go to my blogs and it will be the first one you come to.
0 votes Thank Flag Link Thu Aug 9, 2012
It is always a personal decision. However, If you believe you may stay in the area for certain period of time - it certainly does make sense to buy a property. Perhaps choose an appropriate type of property, area that suits you and an affordable price range.
Should you decide this is what you'd like to do - please do not hesitate to contact me.
Sincerely,
Dmytro V. Bova
Realty Mark - The Diamond Group-Real Estate Sales
Main Line Investors Group - Property Management
700 E. Township Line Road, Suite 100
Havertown, PA 19083
Tel: 610-348-8389
Tel: 610-449-1919 x.223
Fax:484-453-8313
Licensed In Pennsylvania
0 votes Thank Flag Link Thu Aug 9, 2012
That all depends on what your are looking to spend on rent and what you are loolking to spend on a purchase. When you have a chance contact me and we can discuss the pros and cons
0 votes Thank Flag Link Thu Aug 9, 2012
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