In recent times I have been increasingly approached by a younger clientele base, seeking my advice on purchasing a home earlier in life. My previous blog, Buying A Home In Your Twenties offers some tips on purchasing your first home at a younger age. With this blog entry I thought we could continue down a similar path by exploring some of the advantages and disadvantages of Owning vs Renting, right here in Staten Island. Laws are always changing and I would encourage you to seek your own personal advice based on your individual set of circumstances.
For many reading this blog, you will have heard the refrain ‘Rent Money is Dead Money’ growing up, whether it be from your parents, a well to do uncle or a real estate ad online, but that’s not always the case. Today, America has a higher percentage of renters (36.6% of households) than in any period in the last 50 years, and many choose to rent instead of buy for a variety of reasons. Increasingly we are finding that middle aged small families are renting in order to dedicate more of their household income to endeavours such as education for their children, business, or retirement savings for example.
Renting can also be a more practical solution if you don’t have long term plans to stay in the same city or neighborhood. All the costs associated with selling a home–moving and buying again–mean that if you are planning to buy a home, for the odds to be stacked in your favor financially, you need to, at a minimum, plan to stay there two to three years to make it worthwhile.
Renting also means that you do not need to be concerned with maintenance costs associated with owning a home. With some of the historical homes found here on Staten Island, these costs can quickly add up as a homeowner, whereas when you are renting a place, the resolution to these issues is only a phone call away. Other non insignificant expenses that as a renter you don’t need to be concerned about include Homeowners Insurance, Property Tax and, potentially, Private Mortgage Insurance (PMI).
On the other side of the ledger, there are also some very valid arguments for owning your own home. The sense of security and having a place to call your own are chief among them. There is also the data to support the conventional thinking, that over the long term real estate has appreciated in value at a fairly consistent rate of approximately 3% per annum.
With owning a home, also comes the freedom to be able to remodel, paint and hang photos and art work at home as you see fit, without having to seek permission. You will, depending on the location, be able to have your furry friends living with you, too!
Owning your home also includes some other perks such as significant tax advantages. You also won’t have to worry about any surprise rent hikes, which are becoming increasingly common in our real estate market.
Other benefits, depending on your situation, may include that a mortgage can be seen as a forced savings plan. Each mortgage repayment includes an interest component, and a principal component. The principal component of your mortgage repayment is the part that contributes to your equity in the home, and for this reason could be considered a form of savings.
Many couples and families treat the mortgage repayment as a form of protection against future price movements. And looking towards retirement, not having to pay a monthly rent bill is a major advantage! You would also have the possibility to rent out a spare bedroom or two, supplementing your retirement income.
For these reasons, along with many others, home ownership is on the rise in the United States. Nationally, the home-ownership rate rose to 64.2% during the last quarter of 2017, up from 63.7% in the year ago quarter. The number of homes owned by people under 35 rose to 36% during the fourth quarter of 2017, up from 34.7% a year ago!
At the end of the day, purchasing a home will be one of the biggest, if not the biggest purchase decision of your life! So we would counsel you taking your time, running the figures and seeking expert legal and financial advice before making your decision either way. Please don’t hesitate to contact our office with any queries, we are only too happy to help, and love nothing more than helping our clients achieve their property goals!
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This information, based on New York law, was provided courtesy of The Law Office of Christopher J. Arrigali, P.C. It is intended to inform, not to advise. No one should try to interpret or apply any law without the assistance of legal counsel.