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Kate, Home Buyer in New Haven, CT

Does it make sense to buy in New Haven now? Moving in two years.

Asked by Kate, New Haven, CT Tue Aug 18, 2009

My husband and I are looking into renting vs. buying in the New Haven area. He will be starting a two year position at Yale this fall, so we will be moving again in two years. We are open to renting the place after we leave if we can't sell. We are looking at homes up to $150K and can put about half down so we won't be dealing with a large mortgage.

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3
Christine Lovejoy’s answer
The rental market in New Haven is excellent because of Yale and other Universities, so investing in a property with the idea of renting it later (or a multi-family that you can rent immediately) is a good idea. Unfortunately, your price range brings you out of the prime rental areas for these tenants.

Since this will be your primary residence, your interest rate can be very low (assuming you do not own another property). You may be surprised how low your mortgage might be, even if you increased your range a bit. You may want to speak with a mortgage professional to see if a higher price range makes more sense in that you can purchase something that will pay for itself in rental income. There are many two and three families that will allow you to do so and reside there.

Otherwise, purchasing a property does not make too much sense - the lower range in New Haven is still trending downward and once you add taxes and Realtor and Lawyer fees, you will likely do better renting.
0 votes Thank Flag Link Thu Mar 7, 2013
Kate,
Considering that days on market in a normal real estate environment averages 180, two years is a relatively short time to buy something then move again. You might be able to get a seller to pay closing costs, but when you sell you need to factor in the expenses of the sale- conveyance tax, real estate commission, attorney's fees. If you are looking at a small mortgage, likewise the tax benefits for payment of interest on the loan will be smaller as well. Talk to your accountant or visit http://www.irs.gov/
for information and review your financial situation to see i what would be the tax consequences/benefits.
You don't say if you have any pets. As a renter you may pay a premium for renting with pets.
If you can find a distress situation where a seller has to sell (say a short sale , foreclosure or estate) and you have the financial wherewithal and patience to wait for an answer, you may break even or possibly come out ahead in two years.
Each person's situation is unique, so what may "make sense" for one, may not for another.
If you are not currently represented by a Realtor, feel free to contact me-
All the best,
Margaret Shea
0 votes Thank Flag Link Fri Sep 4, 2009
As both a homeowner and a lawyer, I wouldn't recommend that you buy a home for just 2 years. If you add up the closing costs for a buy and a sell, plus homeowner's insurance, taxes (they're high) and no guarantee that there will be much appreciation, you're better off renting. Rentals are fairly reasonable and you'll have your choice of neighborhoods.

It's hard to manage a rental from a distance and is not recommended.
0 votes Thank Flag Link Wed Aug 26, 2009
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