Earlier this week, we talked about WalletHub’s 2017’s Best Big Cities to Live In; however, WalletHub also recently published 2017’s Best & Worst Places to Rent in America. (You can read the full article here.) On that list, Austin ranked #34 out of 150 U.S. cities. Basically Austin isn’t a great or terrible place to rent. So given that there are no real market pressures in Austin to drive renters to buy, how do you know when is the right time for YOU to buy?
Weighing the benefits and costs of buying a home versus renting is a difficult decision for many on-the-fence. Two quick questions can help you assess the economic impact to your life:
- What are your gross rental costs as a percentage of household income?
- What would be your housing costs, given a home purchase, as a percentage of household income?
Here’s how these questions can help. Assume you make $80,000/year and your rent is $1,000/month. If you bought a house, your mortgage payment would be about $2,000/month. So your housing costs went from 15% to 30% of your yearly income. We generally tell people to be weary of anything above 40%, but even with the jump from 15% to 30%, you need to understand what the trade off will be for your lifestyle. Is that money that you use to buy clothes and spa services that you’re willing to dial back on in order to own a home or is that money that you spend on food and schooling for your children, or something else you aren’t willing to cut?
Next, Ask the Stability Question
Armed with an understanding of what this will do to your wallet, then ask: how stable is my life and how stable do I want it to be? If your job is uncertain or you are someone who enjoys moving to a new area of town every few years, it may not be the right time for you.
Understand the Inherent Differences in Renting and Owning
For many people, renting vs. owning a home is not just a financial. Many buildings in Austin offer access to a large variety of amenities, landscaping, maintenance and concierge services that you won’t get with home ownership. Create a list of any current benefits you get with your rental and determine how important they are for you.
Make a Priority List for Your Home
Spend some time “game-planning” your housing goals. Develop a priority list of what is important. Of course, also make a list of what’s not and what you really want to avoid. Know that time, place and circumstance can have a huge influence on the answer. And, to be sure, the right answer is what’s right for you. Once you come up with that, search for homes that meet this requirement and see if they align with your budget. If not, continue to refine your list until you either find the right balance of compromises between wants and budget or decide that renting is a better value for your needs.
Still Undecided on Rent vs Buy in Austin?
We can help you through the thought process and determine whether or not buying now makes sense, or if it makes more sense to wait. Check out some additional resources in our Austin Home Buyer section and then fill out our Buyer Survey, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation consultation.