An increasing number of people – especially empty-nesters, Millennials and those new to the housing market – are asking themselves if they should rent or buy their next home. There are benefits to be had either way, but if you live in or around Boston, most financial experts highly advise buying your home over renting.
Many choose renting over buying property because they believe it’s less expensive. While buying may present a larger investment up front, it’s actually much more expensive to rent, especially in the long run. Real estate experts estimate that, on average, owning your home is 37.7 percent cheaper than renting it. This is the case for major markets around the country, including the Greater Boston area.
For renting to become less expensive than owning, mortgage rates would have to rise 137 percent, or home prices in the Greater Boston area would have to spike by 65 percent. Considering current economic factors in the region, neither of these scenarios are likely to happen in the near future.
A Long-Term Investment
Of course, renting may still better suit some lifestyles. Renting can be a good choice if you don’t plan to stay in an area very long or if you don’t have the cash flow to support buying your own home.
Buying is a long-term investment. If you plan to stay in an area for any length of time, studies show you’ll save money in the long run by buying instead of renting. And if you care for your home and land well, your property is expected to appreciate in value and deliver a profit when you do choose to sell your home.
If you move away from the area and have the resources to spend, you might even choose to then rent the residence you own. Through savvy choices about renters (or through partnership with a trusted property management company), there can be an even greater return on your investment over time.
Planning for Your Future
The benefit of paying a mortgage is that homeowners can lock in a steady monthly payment, as opposed to a rental that could experience increases at the end of each lease term.
This unpredictability in monthly costs can impact your long-term financial planning. Considering the fact that average rents have seen notable increases over recent decades, rising 22.3 percent in the country’s 50 biggest markets, rental costs present greater unpredictability compared to buying, especially as homeownership presents the opportunity to lock-in a long-term fixed rate.
Savvy consumers know that what looks financially smart in the short term may not always be wise over time. A long-term financial view can often bring greater savings and profits.
Decisions about where you live are no exception. By choosing to own your home instead of renting it, you won’t just have the satisfaction of homeownership: You’ll be making a significant investment in your future and saving money for years to come.