By Chad Taylor
You would think as a Realtor my answer would always be to buy is best. However, that has not necessarily been the case over the last few years. As a matter of fact, I have coached several clients to rent their home as opposed to selling during the down market because the market could not support their desired price. Additionally, I have supported the notion that one might consider renting while home values where unstable.
We are now in a much healthier market, yet my team still gets asked this question today. Our answer today is that it is better to buy.
Here are some reasons why.
I am going to just briefly mention the obvious reasons like historically low interest rates and home values still more than 20 percent below their peak in 2006. You may not know that rental rates are up more than 5 percent nationally and are continuing to rise.
It has been interesting this year because as the housing market has improved almost simultaneously the rental market has been improving as well. By improving I mean that the vacancy rate has been dropping and rents have been increasing. This is great for the investor who owns the home, but not for the renter. This lack of supply in the rental market will continue to push rents higher and higher. Therefore, it really is a great time to shift from a renter to a homeowner.
Now lets speak to those who are new to our city. Perhaps here because of a relocation. During the downturn of the market, many companies tightened up their relocation package and have placed more of the financial risk on the employee. There was a time when many relocation companies would offer an absolute buyout to the employee taking away the risk of an employee getting stuck holding the bag if they were only in a city for a short period of time. In a buyout, the relocation company would purchase the home from the employee outright and assume all financial liability. Today, we really only see this style of relocation package for company executives.
For those who are concerned about the aforementioned risk, I have a positive message for you. Currently the break even point for owning a home in Kansas City is approximately 2.5 years compared to a rental scenario. This takes into account your down payment, closing costs, mortgage payments, and maintenance costs. 2.5 years is a short period of time for recoup compared to the recent past and hopefully allows our new residents to enter the housing market more comfortably.
As the housing market continues to improve, there will again come a time when interest rates increase to the point that for some residents it will be cheaper to rent than to buy. Please don’t wait until then. As advocates for home ownership, our team would love for everyone to experience the joy of owning a home. After all, it is a part of the American dream. We would love to help make your dream come true.
Are you interested in the market value of your home, the average days a house is on the market before it sells, or what your neighbor down the street sold their house for? Type in your address to see an up to date view of what is going on in your neighborhood!
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.