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Renting versus Buying?

February 17th, 2013 3:06 PM by Sam Kader

Homeownership is looking more attractive now than it has in years. Rents are climbing 6% in King and Snohomish counties over the past year. Home prices have begun to bounce with interest rates hitting record lows. The monthly rent for the average 2-bedroom, 2 bath apartments in King County now is more than 40% higher than the typical principal and interest payment on  a median-priced condo. Even when closing costs, maintenance, taxes and insurance are factored in - Owning typically is less expensive than Renting in every metropolitan area in the country. Here in Seattle area is about 42% cheaper.

The case of buying a home is much stronger if the time horizon is longer than 5 years. Being a homeowner means you could paint your bedroom purple, deduct mortgage-interest payments and property taxes from your federal income tax.

In general, Owning versus Renting depends on:

  1. Time horizon (the longer the better. In general - at least 5 years).
  2. What is the itemize principal and interest deductions.
  3. What is your marginal tax rate.
  4. What are the closing costs.
  5. What is the yearly maintenance or renovation?
  6. What is the homeowners association dues or condo fees.
  7. Income
  8. Supply and demand of housing
  9. Availability of financing
  10. Economic stability
  11. Desirability of a neighbourhood or school system
  12. Consumer confidence
Posted in:General
Posted by Sam Kader on February 17th, 2013 3:06 PM



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