Finding a place to live can be challenging. One of the largest financial decisions that many adults must make is whether to buy a home or rent one. The good news is that the market has drastically cooled in Fall 2022 offering new things to consider. The reasons to buy or rent are undoubtedly challenging to summarize in a single article. It's not just about ownership when deciding between renting and buying a house - it can be both a financial and a lifestyle decision. If you're not sure you're ready to start the home-buying process, renting is a smart alternative. However, there are many benefits to buying a home, even with rising interest rates.

Pros And Cons Of Buying A Home

BUYING: Buying a home can be a great way to build long-term wealth. The decision to purchase a home has both benefits and drawbacks. Making a final choice might be influenced by the list below.

Pros

• Building equity. History shows that homes generally increase in value each year. While the double-digit growth we’ve seen the past few years is rare, home buyers can expect to gain 3-4% equity each year, making homes generally a smart investment.

• You have a new opportunity to negotiate the price, so you get a better deal.

• Today’s Buyer negotiation power may get your closing costs, a rate buydown, or house repairs paid for by the Sellers.

• You no longer need to waive inspections or appraisals to get an accepted offer. There will be more time to contemplate and evaluate during each step of the buying process.

• More stable housing costs from year-to-year. Your costs are more constant and predictable when based on a fixed-rate mortgage than when renting.

• Greater privacy than an apartment. There’s a cushion of space between you and your neighbors.

• Personalize your home however you like. When you are the owner, you get to update or improve as you see fit. You are in control.

• Longevity in a home builds a community connection. Owning a home can contribute to your sense of security and belonging.

• Tax incentives. Every year when you submit your taxes, you are entitled to tax deductions for paid mortgage interest, county property taxes, and potentially home renovations.

Cons

• Long-term financial commitment and equity is tied up in the property.

• You are responsible for performing all home upkeep, from little fixes like mending a leaky faucet to major ones like replacing the roof.

• Bigger upfront costs. Must save enough money for a down payment and for closing costs.

• Inability to quickly move away, as it takes planning and time to sell a home.

Pros And Cons Of Renting

RENTING: Renting provides flexibility, convenience, and some financial independence but you should take into account a few basic factors before deciding to rent.

Pros

• If you rent, you can leave when your lease expires. Moving is easier!

• Renting gives you complete control over your monthly housing expenses during the term of the lease. Rent may also include utilities.

• The expense of repairs is covered by the landlord. You are not responsible for maintenance.

• Less stringent credit criteria for rental applications in comparison to the requirements for mortgage approval.

• Shorter commitment period. If your living circumstances change, you are not locked in.

Cons

• Rents will continue to rise. It's likely that your rent will increase each year. In fact, the permitted rent increase in Oregon for 2023 is 14.6%. This reflects the fastest rate of inflation the economy has seen in forty years. Many people will not be able to afford this increase.

• Less flexibility for design decisions inside the home due to rental restrictions.

• Your rent payment increases the landlord's wealth but offers no financial growth for you.

• The landlord is also the one who gains equity when the home's value goes up.

• When you pay rent that money is gone. When you own, part of your mortgage payment goes to your equity.

• No tax incentives.

• If the landlord decides to sell, you can be forced to move right away.

• Having pets is more expensive and challenging, or may not be an option at all.

So, Renting Vs. Buying: Which Is Better?

Owning a home is a great way to build your wealth and gain equity. It can be challenging to save enough to cover a down payment, but the rewards outweigh the sacrifices. Especially with Oregon’s approved 14.6% rent increase, owning a home is becoming more important than ever.

If you’re wondering if you can afford to take the leap and purchase a home, shoot us a message and let’s map out your options. The Carey Hughes Homes Team is on standby day and night to address any of your concerns throughout the entire home-buying process, including deciding when the time is right to start the home-buying process. We’re here to help you every step of the way!