Renting vs. Buying: Should I Wait to Buy in This Economy?
If you are in the position to buy a house today, you are in an interesting place. An advantage of renting vs. buying is that you are sitting pretty. You know what your monthly expenses are and you know when your rent is going to increase. However, a disadvantage of renting versus buying is that your money is not working for you tax-wise. You are unable to deduct housing mortgage interest and other housing-related expenses on your income tax.
The real question that you need to consider when looking at renting vs. buying is if you think that the housing market has hit bottom and how stable you think interest rates are going to remain. Experts, of course, have varying opinions on this.
Low-Cost Housing and Low Interest Rates
One way to look at buying vs. renting is that if you buy a home now, regardless of whether the housing market continues to fall, you will have purchased a home at a much lower cost than you would have been able to a year ago at a nice interest rate, and you will also have tax advantages. If you wait, the housing market may continue to fall, but at some point, interest rates may start to rise again. It’s a balancing act.
Buy Now If for the Long-Haul
Another consideration when looking at buying vs. renting is how long you intend to keep the property that you purchase. If you are looking at a long-term investment, then the amount of money that you might save by waiting for housing to continue to fall will be insignificant over the long run, particularly if interest rates increase. Throw in tax savings to the equation, and now might be the right time to buy.
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