A shifting market amplifies the ‘rent or buy?’ dilemma
The Consumer Price Index (CPI) report from July shows that inflation has begun to cool – somewhat, anyway – in response to the Fed’s actions over the past few months. But there’s no question that challenges remain for buyers and sellers, and positive inflation news won’t change that overnight.
We’re still seeing buyers questioning whether now is the right time to step into the market, bringing us to today’s question: Should you rent or buy? Rents have risen significantly in many cities, along with home prices and mortgage rates. But high rates don’t automatically make it a bad time to buy.
While there’s plenty of factors to consider, we’ve outlined three major ones below when making the decision of whether to rent or buy.
To rent or buy?
Like any potential home purchase decision, it’s important to have a strong understanding of your own finances and what you can realistically afford. You can start by looking at calculators like this to understand, high-level, what the equation looks like. Here are three to consider beyond your monthly down payment and rent.
1. Location matters – a lot: While interest rates don’t vary widely between different locations, home prices and rents do. Inventory levels and the amount of competition among homebuyers in your market may also play a factor here.
2. Timeline is everything: While you can’t time the market, your own timeline means everything. How long you plan to be in your next home should be a significant factor in your decision to buy or rent.
3. Stability or flexibility: For those who value stability – putting down roots, building equity in a home etc. – homeownership can give you that. For those who prefer more flexibility to change jobs or move, renting may be a better option. Whether or not you want the responsibility of home maintenance can play a part here, as well.