Renting or Buying A Home Within A 5 Year Time Horizon

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Renting or Buying A Home Within A 5 Year Time Horizon
By Scott Rogers • July 7, 2020 Filed In: buying, financing, renting
If you will only be in your next home for two (or 1, 3, 4 or 5) years -- should you buy that home? Or just rent a home instead? Let's take a look, assuming a price point in the current market of around $175K - which is likely to be a townhouse and might be what you are considering as a first time buyer... As becomes pretty quickly, above, it doesn't necessarily make much sense to buy if you are only going to be in your home for 1 or 2 years -- and once you get to a time horizon of 4 or more years, it almost certainly makes sense to buy a home. For clarity, let's look at how I'm determining the cost of renting and buying this fictional house... The Total Cost of Renting Includes... Monthly rental rate x 12 x # years Yep, that's it The Total Cost of Buying Includes... Monthly mortgage payment x 12 x # years + closing closing costs when buying your home (3.5%) + cost of selling your home (5% + $1K) + potential maintenance costs (1% / y) - appreciation of your home's value (2% / y) - potential tax benefits of interest paid (int x 40% x 25%) As you can see, I am intending for this to be a full accounting of the total costs of home ownership -- not just comparing the rental payment to the mortgage payment. Here's a visual (click for a closer look) as to how those numbers line up over a one through five year time horizon... I should also note that it is quite possible to be "just fine" from a financial perspective if you buy and only end up being in the home for a year or two if... your home's value goes up much more than expected during that time frame you have little to no maintenance costs during the time that you own the property you decide to keep the property as a rental property and thus do not need to factor in the cost of selling the home As you are thinking through whether you should buy or rent -- at a $175K price point or otherwise -- feel free to touch base with me and I can give you some feedback and advice based on your overall circumstances. Receive updates from HarrisonburgHousingToday.com via e-mail: Enter your e-mail address: Recent Articles: When Should I Start Looking For A Home To Buy If My Lease Ends This Summer? Office Building, 77 Apartments and 93,600 SF of Storage Units Proposed Amidst Residential Developments, Church, Rescue Squad and Hospital in Rockingham County There Are Usually Two Phases Of Looking For A Home January Housing Inventory Levels Sink To New Lows Will Buyer Activity Continue Full Strength In January? Maybe Some Townhouse Developments Have Fewer Homeowners (Living In Those Townhouses) Than I Thought Juniper Hill Commons, A Multi-Generational Cohousing Community Is Under Development On Keezletown Road Most Homes Sold Quickly In 2020! Not Much Negotiability In Home Prices In 2020 At Year End, Home Sales Up 13%, Prices Up 10% in 2020 in Harrisonburg, Rockingham County
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Jan 28, 2021 (unless otherwise noted).
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