In hot real estate markets (or any market, really) we're always tackling the same old debate: "You're throwing your money away on rent!" vs. "You're throwing your money away on interest!". In all actuality, the question of renting versus buying is a lot more complicated than it is often made out to be. Following are some pros and cons to both, and a little advice on how to sort out the truth for yourself.
Renting pro: no maintenance required. Is your bathroom sink leaking? Is your furnace no longer providing you with heat? With a law-abiding landlord, these problems are just a phone call away and require no expense on your part. As a homeowner, however, you must come up with the cash for these inevitable fixes yourself. You should also be budgeting for yearly maintenance, such as plumbing repairs, cosmetic upgrades, and roof replacement, if necessary. However, these upgrades and repairs do usually maintain or contribute to the value of your home.
Buying pro: interest rates are bottoming out while rentals are steadily rising and in demand. The best time to lock into a mortgage is when interest rates are low. If you play your cards right when you renew your mortgage, interest rates might still be low, making your situation an enviable one to be in. You can also use the many renters looking for homes to help with mortgage payments. Renting doesn't guarantee that payments will remain the same month-to-month, but buying and locking in for a long term does!
Renting pro: pick up and move wherever and whenever you like. Renting gives you the freedom to explore different parts of the city and determine the right area for you. When you decide to buy, you'll be knowledgeable about the areas you do and do not enjoy living in.
Buying pro: owning your home means you can customize it to suit your own needs. Want to have your own garden? Go ahead! Want to paint your kitchen hot pink? It's your house! You can also have pets that many landlords might not allow, and if you're considering buying a detached home, you can play experimental acid jazz and dance like a clown without worrying you're disturbing anyone (well, unless you count your newly-acquired pets). While renting affords the freedom of picking up and moving, owning your home also comes with its own kinds of freedoms and privacies.
When it comes making the decision between buying or renting, it is a question of being honest with yourself about your needs and your finances and getting facts from professionals. Speak with a real estate agent you trust to get some advice on when you should think about saving up your down payment. Homeownership might be a closer milestone than you think!