Should I Rent or Buy?

April 14, 2011

For those of you who follow my recent posts, you are probably aware that my wife and I are re-locating to another state; in fact as I write this the movers are boxing up our possessions and will be loading up the moving van tomorrow. Well I have to tell you, there is finality when you see your worldly goods packed in boxes by strangers! What isn’t final (yet) is where my wife and I are going to call our new home.

The reason for this is that she and I are grappling with a question that many people have and that is, “Should we buy our home or rent?” At first we were both gung-ho on buying because after all, we were moving to a more affordable area, the housing market is low and mortgage rates are low. Should be a no brainer right? Wrong! There were a few things that we needed to consider before we decided to purchase and I’m sure many people have gone through exactly what we are going through now. So, on that note, here are some things that we are thinking about and what can help others who have this conundrum of buying or renting:

First and foremost, know the area that you are moving to. This may be easier if you are moving locally but if you are moving out of state for example, you may have no idea what the neighborhood looks like, crime statistics, schools, median property values, etc. In our case because the area we are moving to (Chicago) has many different neighborhoods, it is very important for us to research. Sometimes the best way to get an idea of whether a neighborhood is good is by walking through it. Since that often can’t be done, you can check out a site like: http://www.walkscore.com/ which can give you a good idea of how “good” your neighborhood is.

How long are you going to be in the location? If you are planning on staying in an area for a long period of time (for example over 5 years), buying may be higher on the list. If, however, you relocate frequently, renting may be the better option.

Consider the current housing market. I alluded to this earlier. In the current market where home prices are falling in most areas and mortgage rates are low, you would think that buying would be a no brainer. It may very well be, IF you have considered the above points and everything points to buying. But part of really understanding the neighborhood is really understanding the economics of where you’re moving; how is the housing market doing? Is it going up, flat-lining or still on the down slope? What is the unemployment rate? Foreclosure activity? Knowing these things on a base level will make your buying decision a bit easier.

These are obviously only some of the items to consider but they are still integral to making the right decision. So, what are my wife and I going to do? We have decided to rent for at least a year.

Now we just have to find the right place!