It’s a tough and sometimes scary decision, but the research shows that buying is the better choice in most cases. The Federal Reserve’s Survey of Consumer Finances has consistently found a huge gap between the wealth piled up by homeowners and that accumulated by renters. Home ownership builds wealth in two ways: through the forced savings of paying down a mortgage, and through appreciation -- the rise in the home’s value over time. The earlier you get in the game, the quicker you can get that appreciation working for you. The longer you wait - well - the consequences can be stiff. Most experts agree that if you plan to live in the same area for three years, it makes financial sense to buy if at all possible.
BUYING: THE PROS
- You build equity. Instead of paying someone else’s mortgage each month, pay your own and put your money to work for you. By making roughly the same payment as you would if you were renting, when you decide to move you actually re-coup much of what you paid.
- You get tax benefits. All of your interest and property taxes are tax deductible at the end of the year, none of your rent payment is.
- It’s a great investment. Property values are increasing 6% a year nationally, and the in-town Atlanta market has seen an appreciation of 12-18% annually in the past 5 years. That’s a better rate of return than the stock market.
- Freedom. No one can tell you what to paint it or how to decorate it. The emotional reward of knowing you own your own home is huge.
BUYING: THE CONS
- Cost. Typically in Atlanta it is slightly more expensive to buy vs. rent, although not always. In some markets (like CA or NYC) it is vastly more expensive to buy than rent.
- Maintenance. While you no longer have to ask permission to hang a picture on the wall, you also don’t have a landlord to call if something breaks.
- Commitment. Although you can buy and sell a home in less than two years if you need to move, it is not advisable and has some financial ramifications.
Want to know more? Check out this great AJC article written by columnist John Adams. He makes some interesting points!
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