This is a common question of people who are thinking of becoming home owners, but are afraid to make a move. (No pun intended)
The reality is that the housing prices in Charleston, SC are very attractive and the interest rates, historically low. These two facts everyone can acknowledge. Most people purchasing real estate do so because they consider the monetary value of owning your own home and the pride of ownership. Over many years, there is an appreciation in the property value, thus a good investment for the homeowner. However, because many real estate markets are like the Charleston real estate market, owning your own home is becoming even more compelling. Read the following two articles and see why.
”Researchers from several universities have just completed a paper that looks at what they call the hurdle rate. This is the point at which it’s equally smart to rent or buy if your only criterion is to build wealth. Based on today’s hurdle rate, it’s a better time to buy than to rent, because you can build more wealth owning than renting.” Rent Vs. Buy
“Despite the rising number of renters across the country, it is cheaper to buy a home rather than rent one in 72 percent of the 50 largest cities in the U.S., according to an index released by real estate search and marketing site Trulia” Cheaper to Buy Than to Rent
In an effort to confirm this information, I picked a neighborhood in Charleston, SC, West Ashley. I compared two homes with 2200 square feet. One home is for sale and the other home was recently rented. Here is what I found.
The monthly cost for the home for sale with a 3.5% down payment and a 3.875% interest rate is $1135 for the Principal and Interest payment. If you add $250, monthly cost for the taxes and the insurance, your PITI payment would be $1385 per month.
A similar home in age and in size recently rented for $1700 a month. That is $315 more per month to rent than to buy a similar home in the same neighborhood.
So the answer is clear. If you can qualify for a loan and have money for a down payment, the decision whether to rent or to buy is…..BUY!!!