Why is this rent vs sell debate happening? How do you know if renting is a good option?
Let’s consider the current market trends, and then talk about 3 ways to decide if renting will work for you.
Houses are in Short Supply
Housing markets right now are facing a sluggish inventory, even though there are buyers out there in search of a new home. The prices of homes could be driven down and be more affordable in many areas if there were more options on the market. Home sales in January dropped 3.2%, which is the biggest decline since 2014, according to Inman.
The main reason: there aren’t enough options for the buyers currently looking.
Interest Rates – On the Rise
Interest rates on mortgages have steadily been under 4%, until recently. The average 30-year rate has now passed into the 4.5% range, which has both positive and negative effects. This is still less than half of their historical average, which means now is as good a time as any to lock in your rate, according to The Mortgage Reports’ Tim Lucas. However, it also means that the mortgage you qualify for might be less than you thought.
So, you have a house that you love, but it’s time to move on. (Just like it’s time to get rid of that jacket with the shoulder pads from 1985) But…is it worth selling, or are you better off renting?
Here are 3 key factors to consider in the Rent vs Sell debate:
1. Will the rental cover ALL of your expenses?
- Carrying costs of a home can be pretty pricey when you factor in taxes, electricity, mortgage payments, insurance, and everything else. The only benefit to a rental property would be cash flow. So if you can’t get a rental price that covers your expenses and makes you profitable- don’t waste your time.
2. Do you like the idea of being a landlord?
- It’s 2AM and you get a phone call from your tenant that the washing machine is broken and water is everywhere. Or snow is in the forecast and your tenant needs to get out early in the morning, which means you have to arrange for snow removal. These are some of the realities of being a landlord. If that sounds appealing, and you have the patience to deal with it well, then renting might be a good choice for you. On the other hand, if you thought you could sign the lease and just collect the checks – think again!
3. Do you ever plan on living in that house again?
- Here we come to the real issue at hand: letting go. If cost is no factor, then why keep the house as a rental property? One valid reason would be if your job is relocated, or something personal in your life shifts, and you see yourself ending up back at this same house. If you can’t wait to move on and do not see any chance in the foreseeable future that you would move back in, then maybe it’s time to officially sell!
Each situation is different. You have to run the numbers and decide what makes the most sense for you and your family. A good Realtor can run each scenario for you in order to help make this difficult choice of renting vs selling.
Maybe you need to do some reflection and decide if you really want to keep it for financial reasons, or if Elsa was right all along….