BUY Versus RENT By The Numbers

Dated: 01/22/2015

Views: 226

Should you continue to pay your landlords mortgage payment or buy your own property and begin to build your own wealth?  Let's look at a purchase and rental scenario.  

The median home in America costs $190,000 and historic annual home appreciation is around 3%, according to data from RealtyTrac.  If you purchase a median home today, and put $19,000 (10% down payment) with 30 year fixed mortgage at 4%, you would own a home worth $426,000 in 2045 and pay a total of roughly $373,000 for it.  That includes mortgage, taxes and insurance, a difference of $52,000.  After 30 years you could live rent free, a nice prospect as you head into retirement.

If that same person rented and we assume they pay $1,312 in rent, which is average fair market rent for a 3 bedroom nationwide, according to RealtyTrac, and his rent increases 2.7% per year (average increase per RealtyTrac), they will end up paying $717,000 in rent over that 30 year period.  All without anything to show at the end of the 30 years. 

If you are thinking of buying, don't wait, waiting has its costs too!  Interest rates and median home prices are likely to rise down the road.  At the current rate of appreciation, in 10 years that average home will be likely be selling for $249,000.  If interest rates rise to the historical norm of 5.6%, that mortgage payment on that $249,000 home would be $1,574, which is a 52% increase over the $1,037 mortgage payment for the median priced home now.  

For a private consultation on buying vs renting or to determine your purchasing power call me, 703-615-2663.  

Want to Advertise on this Site?

Latest Blog Posts

You Need An Agent Who Will Always Put You First

You Need an Agent Who Will Always Put You FirstWhether you are a rookie homebuyer or have gone through the process many times, having a local real estate expert who is well versed in the

Read More

The Number One Reason To Put Your House On The Market Today

The #1 Reason to Put Your House on The Market TODAY!The National Association of Realtors (NAR) released the results of their latest Existing Home Sales Report which revealed that

Read More

Americans Rank Real Estate Best Investment For 5 Years Running

Americans Rank Real Estate Best Investment for 5 Years Running! [INFOGRAPHIC]Some Highlights: Real estate has outranked stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long

Read More

4 Reasons Why We Are Not Heading Toward Another Housing Bubble

4 Reasons Why We Are Not Heading Toward Another Housing BubbleWith home prices continuing to appreciate above historic levels, some are concerned that we may be heading for another housing ‘boom &

Read More