Rent vs. Buy Decision More Than A Question of Affordability

When it was time to leave the nest a few years back, Mankus purchased a condo, but homeownership quickly became her albatross, according to a story by Bill Glauber in the Milwaukee Journal Sentinel.

The Gen-Yer had tuition debt to pay and that meant being mobile, independent and ready to hit the road at any time.

After a few months as a homeowner, she unloaded the condo, moved in to a rental with a friend and regained control of her life, Glauber writes.

For a growing number of those seeking shelter, the affordability component of the rent-vs.-buy comparison takes a back to seat to finding housing that accommodates their lifestyle.

"For decades, Americans have scrimped and saved in order to buy that starter house and begin accruing equity. But do the same benefits of home ownership apply in every situation?" asks Dima Deych Marketing Director at Mayo Group, a Boston, MA-based real estate investment, development and management company.

Apparently not.

Deych says there are a host of considerations beyond affordability shelter seekers should consider before they buy or rent.

Location.Just as location is a factor in buying, where you rent is also key.

Buying a house in or near the downtown district of a large city is often more expensive than a suburban home. Because of the growth of the urban infill movement as well as space constraints that gave rise to high-density living years ago, apartments can be more readily available.

"Urban settings are seeing an influx of people who want to be able to live near work and the cultural attractions that you find in a big city," says John McGrail, CEO of Mayo Group.

Ease of relocation. A short-term or month-to-month rental contract is a lot easier to unload than it is to sell a property. What's more, if you sell a property too soon, given the time it takes to accrue equity these days, you could sell at a big loss.

If you are on a career track, planning to move back to your home town to be with family, or just need the flexibility to relocate, buying may not be for you.

Square footage. If you are on the go, career-wise, or just don't spend much time at home, are outdoorsy and travel frequently, a studio apartment or place to sleep may be all you need. If you don't spend much time in your house, a large space will be a waste of space and money.

Job security concerns. Without job security, you need the flexibility to relocate. A homeowner's worst nightmare is losing a job and not being able to quickly find another or being forced to relocate to find another job. In both cases, paying the mortgage or selling the home could be tough.

Defaulting on your mortgage can lead to foreclosure, wrecked credit and high blood pressure. If your employment is shaky, now's not the time to buy. Jobs are tough to come by.

The economy. The soft economy could impact your employment opportunities. It has also prompted lenders to tighten credit. Take a hard look at the local economy where you would like to buy. Renting in a recovering economy can give you time to save for a down payment and put yourself in the best position to buy.

Poor credit. If your credit is trashed, lenders won't approve a mortgage for you. A year or two renting and careful credit use can give you time to boost your credit score and position yourself as a strong homebuyer.

Maintenance. The best homeowners are do-it-yourselfers who don't have to call the plumber every time the sink stops up. In an apartment complex, even a single-family home you might rent, the landlord or property owner direct, or through the building manager or the superintendent, is typically responsible for maintenance.

Your relationship. If your relationship is young or on shaky ground, think about the consequences of buying a home with someone who may be out of the picture weeks, months or even years from now. If you're dependent on two incomes to make the mortgage payments, if there could be a court fight over assets if you split, renting is probably a better deal.

When you share assets in marriage or other relationships a prenuptial or other agreement also may be a good idea.



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