Until recently, the question on whether you should buy or rent property in 2011 didn’t matter. It was only four years ago when the housing market was booming and everyone was buying up mortgages. But now that national home prices have slid substantially and potential buyers are being more cautious, the debate has been reinvigorated.
Many people hunting for a home these days are considering both alternatives. To determine which option is better, you should compare the costs of buying a two-bedroom condo with the costs of renting one. The results can be extrapolated to other classes of homes, such as larger single-family houses.
Another factor, of course, is price stability. Unlike home prices, rents tend to rise or fall just a few percentage points each year. On the other hand, the national median home price jumped 12.2% in 2005 and fell nearly 20% in 2008.
For example, Minneapolis is one city where it makes the most sense to buy. The average listing price for a two-bedroom there was about $150,000, while the average annual rent for one came to about $20,400. Buying, therefore, costs less than eight times the annual cost of renting.
If you want to buy, states such as Texas, California, and Florida have prices dropping. There are other states where housing prices are dropping, but it just depends what area you shop. For example, a house in Palm Bay, Florida that went for $250,000 four years ago can now be purchased for $80,000.
Shop wisely, whether you are renting or buying, and consider the cost of the living, schools, and neighborhoods.By: Mary Smith
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