We were very intrigued to read an article that appeared on investors.com very recently, showing that, in New Mexico and no less than 41 other states, renting is now more expensive than buying, when looking at median monthly rent prices for single family homes, compared with paying a monthly mortgage, property taxes and any applicable insurance, assuming a 20% down payment has been made and the home loan is at a fixed rate over 30 years.
The article quoted data from gobankingrates.com that demonstrated that, in New Mexico, using all the above criteria, it's actually $82 less per month to be a homeowner!
We've often touched on the rise and rise in rental prices in this blog over the years. While lower and lower mortgage rates have accelerated demand for home purchase, the rental sector is also booming as so many renters still can't afford to purchase, particularly because many are struggling to overcome debt issues. This is especially true for millennials who, despite predictions to the contrary, have not been buying homes in quite the expected profusion this year, although there have been one or two more encouraging signs lately.
Let us say right away that we appreciate that just because buying is theoretically cheaper doesn't mean that these new statistics are meaningful to everyone. What they do highlight, however, is that those currently renting, but with solid finances and a good credit rating, really might easily be better off getting on the housing ladder.
Apart from the monthly cost advantage, owning a home of your own is still just about the best investment there is over time. Stay renting and you're contributing to your landlord's wealth, not your own. Apart from these considerations, there's also the priceless freedom of living in your home exactly as you wish.
What well qualified renters need to consider very carefully here is that the buying-beats-renting data is, of course, based on the current ultra-low mortgage rates. So the strongest advice has to be to act now to lock in a low rate while you still can and take full advantage of the potential cost advantage, before anything changes significantly, always being mindful of the uncertainties that may follow the presidential election in November, irrespective of who wins.
Another interesting aspect brought up by these latest stats is that if you have either been turned down for a mortgage in the past or have previously dismissed the idea of buying on affordability grounds, this is a quite possibly a great moment to revisit the idea.
As ever with financial matters, it's important to seek professional guidance. One possible start is to click here and begin the process of pre-approval for a mortgage. We'd also be delighted to answer any questions you may have concerning matching a home purchase to your individual needs.