Are you planning on a Boston relocation, but aren’t sure if you want to buy a Cambridge condo or rent a South End apartment? You’re not alone! The age-old debate regarding whether it is more cost-effective to buy or rent a home is seemingly never-ending; although in the past, the argument has typically favored renting.
A recent article, however, indicates that now the debate may be shifting in the favor of buying a home. For a long time, renting was considered the cheaper alternative, but due to current economic factors such as low mortgage rates, it is now believed that in some instances homeownership may in fact be the less expensive alternative.
Since the economic downturn in 2007, average apartment rental rates have dropped, but when compared with the decline in home values, this drop appears moderate. Research shows that home values in the US have gone down 30-40% in the past few years, indicating that there is more of a cost-cut in homeownership. This factor, combined with low interest rates, tax benefits, and capital gains, contribute to the appeal of buying a home.
Although this shift may be occurring, it is not without hesitation and doubt.
As economic consultant Micahel Carliner explains, “Expectations have been tarnished by recent experience. A lot of people were overconfident about capital gains — now they are overly pessimistic”. He also notes that more upfront money is required when buying a home and additionally many potential homebuyers feel tied down with too much negative equity.
Everyone’s situation is different, but typically, if you plan to live in a given location for less than two years, it is better to rent due to the high costs associated with buying a home and the uncertainty of how long it could take to sell your home. For those who plan on living in a location for more than ten years, however, it may be a more worthwhile decision to invest in a home.
No matter which option is best for you, Warren Residential Group can help. We have a wide selection of Boston real estate for sale, and Boston rentals available.
Read the full article here.
