Is Buying Cheaper Than Renting

Perhaps you’ve seen the upswing in rents late if you rent in Costa Mesa, or perhaps you saw the recent article on CNN’s webpage that buying may now be cheaper than renting a home. And I know this won’t concern lots of you because you will be winning that lottery this week, anyway right?🙂

 

Let’s look at the basics – rents have gone way up. If you currently rent a home in Costa Mesa real estate for under $3,000 a month, consider yourself lucky. Rents around Orange County are way, way up. Costa Mesa has always been less expensive, but it is getting considerably more pricey as the year goes on. Demand for rentals is steep with so many people coming out of ownership for reasons of short sales, foreclosures, or not being able to qualify to buy themselves. The rental market will continue like this for the next twelve months without a doubt.

 

 

As the demand for rentals increases, and lack of rental inventory continues, buying looks like a better option. Combine that fact with fact that interest rates remain low and home prices are down, and you have the equation for the right time to buy.

 

Let’s compare what it would cost to rent the average Costa Mesa real estate home vs. owning it every month.

 

I’m going to use the same $3,000 monthly value as a rental amount, and I will compare that to an average 4-bedroom home in Costa Mesa real estate.

 

 

Now, I have taken some assumptions out of the equation to answer the question “Is Buying Cheaper Than Renting”. There will be repairs that you will have to pay for on the owning side of the equation, there is always home maintenance that you have to take care of. Things break, that is just the reality. Also, you have to put $16,500 down (3.5%) to buy that home with an FHA loan. And those come with PMI insurance. Buying with 20% removes great cost from this side.

 

 

But the biggest takeaway now is that if you own a home all of your mortgage and taxes all help to reduce your income taxes. And trust me, that is a significant number the first 10 years of a new mortgage. On this loan example above you could expect all of the interest as a write down off of your taxable income. That’s significant.

 

No, it won’t stay like this forever in Costa Mesa real estate. The one item pushing our area into a buyer’s advantage is the significantly reduced interest rates. Rates as of this writing are just a hair over 4%. Once they get over 6% you can see the pendulum swing the other way. Here’s a good rent vs. buy calculator if you want to do the math for yourself.

 

Interested in buying? Colin Delaney can help and can be reached at (714) 743-9882 or E-mail me here to reach me. Here are some 4 bedrooms for sale in Costa Mesa where it would be cheaper to buy, and yes it Is Buying Cheaper Than Renting.