Rent Vs. Buy
In the wake of the recession many consumers have (or had…according to some of the latest research) lost confidence in the housing market. It is very important to do local research on your market as real estate is hyper local (as in neighborhood…not even region). We find that the national media has been very unkind to real estate. What we have found locally is that Center City Philadelphia & it’s surrounding neighborhoods have weathered the storm very well due to a diverse job market & relatively lower pricing in comparison to other Northeast markets. In Philadelphia home ownership is more attainable then say, neighboring Washington D.C. or New York City. We want to give you a few things to think about as this is a highly personal decision & is completely dependent on the individual.
How Long Do You Plan on Living in Philadelphia?
My general answer to clients on whether buying a home is a better idea than renting is if they plan on staying here for 5 years or more. In general the financial benefits of home ownership tend to exceed the benefits of renting after 5 years. If you plan on staying less then 5 years you may not want to put out the down payment or have to deal with selling a home when you decide or have to move again. If your financials are strong enough you may decide to buy a multi family property or purchase well below your means & hold on to the property as an investment. This is obviously something you would want to do your research on as many people do not want to take on the responsibility of being a landlord. On the other hand, owning real estate is a great way to build your net worth.
This has been more difficult these days due to more stringent lender guidelines. The best thing to do is to call a lender, get pre approved & discuss loan programs. The lender can run numbers for you & you can get a very good idea on what kind of down payment would be needed & what your monthly payment would be. If it turns out that your monthly payment is lower than what it costs for you to rent you may decide that home ownership is for you. If it is equal or slightly greater you may want to discuss some of the tax benefits of home ownership as it still may be in your favor to own a home. If you need a lender recommendation please contact us.
Are You Ready to Own a Home?
Owning a home means maintenance for the indoors & outdoors. You can no longer call your landlord for a leaky faucet or running toilet! While many people truly enjoy maintaining & personalizing a home there are quite a few who do not want to have to deal with it. This is a very personal preference & should absolutely be taken into consideration. Many clients come to us looking for a fixer upper as they can often be had for a lower price. Our warning/advice to them is to have a contractor come and quote them during the home inspection period. Fixer uppers can be more costly then it originally looks. You want to be sure to price this into your offer, ensure you have the time it takes to devote to actually fixing it up & be sure you know what needs to be done on top of the aesthetic work in terms of mechanical systems, electrical systems, the roof etc. Some people want a low maintenance home from the start & are very up front about this. A less high maintenance option could be a condominium.
The General Cost
You want to take into account the down payment, closing costs, purchasing furniture & any potential fixes that you would want or need to make. You will also want to take into account rental prices. Rental prices have been rising in Philadelphia for awhile now making home ownership very attractive. We have been seeing a barrage of first time home buyers who are sick of paying someone’s mortgage for them. Often buying in this city makes sense due to lower entry level prices, low interest rates & a strong rental market. Check out this rental calculator! If you would like more in depth advice or get an idea of what is available in the market place contact us today!