{"id":114935,"date":"2019-08-31T12:00:44","date_gmt":"2019-08-31T18:00:44","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=114935"},"modified":"2021-03-16T14:55:39","modified_gmt":"2021-03-16T20:55:39","slug":"real-estate-rent-buy-right-now","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/real-estate-rent-buy-right-now","title":{"rendered":"Does It Make More Sense to Rent or Buy in Today’s Real Estate Market?"},"content":{"rendered":"

Being in real estate these days, it seems like the only question people want to ask me is, \u201cAre we in a bubble?\u201d <\/span><\/p>\n

The problem with that question is that there are great arguments on both sides. Anyone can pick a graph and quote things like historical trends or current supply versus demand and make a very convincing argument. While I don\u2019t have a crystal ball, I do have concerns that we have approached the top of the cycle. <\/span><\/p>\n

I see people I know stretching their budget, and I’ve noticed banks thinning their requirements just to get a name on a deed. It begs the question: Is now the right time to be doing this?<\/span><\/p>\n

Is Buying or Renting a Better Idea in Today’s Real Estate Market?<\/h2>\n

Owning a home in this country is part of fulfilling the American Dream. It’s both a blessing and a curse. Buying that first home has become synonymous with \u201cmaking it\u201d in life. As such, it’s at the top of most people’s list of aspirations. <\/span><\/p>\n

My husband and I have owned plenty of homes over the years and currently live in our potential \u201cforever home.” At the same time, I know people who are very smart and successful investors who swear that renting a home is the way to go.<\/span><\/p>\n

Related:<\/em><\/strong> To Rent or To Buy: A Complete Analysis for Prospective Homeowners<\/a><\/em><\/p>\n

That brings me back to the current state of the market. If I believe that annual price appreciation is going to slow significantly or even stop, can I argue that these renters are wrong?<\/span><\/p>\n

\"Happy<\/p>\n

Buying vs. Renting: By the Numbers<\/h3>\n

As always when it comes to real estate, we decided to do the numbers<\/a>. While we love our forever home, we are lucky enough to have access to investments that return 10 to 30 percent on our money, so the equity in our home could be doing a lot more. Obviously everyone\u2019s situation is different, and the numbers can vary widely in different parts of the country. But here I’ve tried to use averages and historical data as much as possible. I will try not to overcomplicate it with things like tax deductions, etc., since once again that is situation-specific.<\/span><\/p>\n

For easy numbers, let\u2019s look at a $500,000 home.<\/span><\/p>\n

Related:<\/em><\/strong> Should Real Estate Investors Sleep Soundly Despite Stock Market Scaries?<\/a><\/em><\/p>\n

Expenses<\/strong><\/p>\n

Your biggest expense is obviously your mortgage. At a 4 percent interest rate, your payment would be about $1,900. Contrary to the popular argument that a mortgage is \u201cpaying yourself instead of the landlord,\u201d about $1,350 of that is going to interest payments in the beginning. So disregarding principal payoff, your mortgage costs you about $1,350 a month.<\/span><\/p>\n