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Real Estate Market Info

The Truth Behind Renting vs. Buying a Home

Buying vs Renting

Are you doing the math these days around renting versus buying a home? Trying to decide if you can afford to buy? If so, you’ve probably Googled one of the many “rent versus buy” calculators out there to help you get a handle on your budget. Here's one eye-popping fact to keep in mind while you conduct your research: As of the first of the year, average apartment rent in Greater Boston is $2,955 with one-bedroom apartments going for $2,455 a month on average and two-bedroom apartments renting for an average of $3,062. Ouch.

While online calculators are helpful, and they can also help clue you in to things like insurance expenses and property taxes, they do overlook a number of key factors in the decision.

1. A mortgage is a surefire way to build wealth. Provided you don’t buy more home than you can truly afford, your mortgage is like a mandatory savings account. A portion of your payment each month is going straight into your equity in your home. With renting, it’s your landlord who is building equity, not you.

2. The tax situation has profound implications, especially in expensive markets. Until the laws change (and there’s little probability they will any time soon), your mortgage interest and property taxes are deductible on your income taxes. In expensive markets, this can represent  massive deduction. (Also remember: Early on in a traditional mortgage you pay the most in interest and your deduction is the highest.)

3. Renting puts your wallet at the mercy of the market more often than buying. If you have a year-long lease on an apartment, your rent could go up significantly should the rental market heat up. Your rent isn’t likely to stay the same over a long period of time. In most cities, in fact, it will steadily go up. With a standard mortgage, however, your payments are fixed and predictable. It might seem like a lot at first, but if you buy within your means, it’ll seem like less and less of an expense as the years go on.

4. A mortgage gives you more future financial flexibility. The longer you have a mortgage, the more equity you build. The more equity you build, the more options you have to borrow against that equity or use it in ways which may be advantageous for debt and tax purposes. With renting, no such long-term benefit exists.

The key here, of course, is accepting the fact that you must buy a home you can afford which is priced in accordance with the market. Even if you’re not ready today, having a conversation with a Realtor will help you prepare for tomorrow.

How does renting look now? Should we have a conversation? Contact me today so we go over all your options.

Michael A. Pallares, Realtor (617) 899-3162, mpallares55@gmail.com

July Housing Market Report for Brookline and Boston

July Housing Market Report for Brookline and Boston

The most up-to-date housing market report for Brookline and Boston suggests that we've had a slowdown in July. Pricing hasn't been affected too greatly but lack of inventory has stalled the momentum we saw earlier this year. With the Federal Reserve giving more serious thought to raising the interest rates, my thoughts are as follows:

  • Sellers thinking of about putting their homes on the market shouldn't delay
  • Buyers who already have a signed offer should discuss a rate lock with their lender. If their lender doesn't offer a rate lock, shop around
  • Those home buyers thinking of purchasing a property in the coming months, should be certain to keep nurturing their down payment fund. A higher down payment could translate to a discount on your mortgage rate

For a closer look at what's happened in the Brookline and Boston housing markets, check out the numbers at http://bit.ly/2ceTHIM

Michael A. Pallares

at Andrew Mitchell & Company

617-899-3162 | mpallares55@gmail.com Offices in Concord & Marion, Ma