Should You Rent Or Buy Your Next Home?

March 4, 2009 12:00:00 AM PST
Many families are trying to figure out which option makes more financial sense.Real estate experts report the housing bust has home values edging back down to levels closer to the historical average and narrowing the gap between the cost of a mortgage and monthly rent.

If you've put off buying; now may be the time.

If you can get a mortgage these days, owning a home instead of renting is looking more attractive, financially, than it has in a while. The gap between the cost of renting an apartment and the average monthly mortgage in the country's 50 largest housing markets is shrinking.

Plus, people buying newly built homes in California get a $10,000 dollar tax credit, over three years. And the national stimulus package also included an $8,000 dollar federal tax credit for first-time home buyers.

"Now that we got the tax credits, low down payments and low interest rates; everything seems to be the perfect time to buy," said first time home buyer Kris Woods.

Still, in these tough times, other families find more financial flexibility with the rental market and are opting out of owning homes.

Logan and Melissa Summers used to have a 30-year fixed mortgage. But two years ago, they sold their house and became renters.

"Right now there is not that specter of losing equity. I mean, everybody is kind of in the same boat," said renter Logan Summers.

They pay $1,300-dollars a month in rent. That's about six-hundred bucks less than what they estimate a comparable home's monthly mortgage would cost. And they're also saving on taxes, insurance, and repairs. With the extra cash, they can eat out more and make more trips to the grocery store; they're even planning a family vacation.

There's a perception that renting is throwing your money away, but renters argue a home is not the sure investment it once was. Another reason the rental market is still going strong. For many homeowners facing foreclosure the only alternative for them is to rent an apartment.



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