We are going to roll out that controversial conversation topic: renting vs. buying. We’re not going to try to change your mind or tell you what to do, though. Here’s why: if you already bought a home, you already have your opinion, and if you’re currently renting, you probably have good reasons for it, and you probably have half a dozen well-meaning people in your life telling you that you should buy a house. You don’t need us to tell you what to do. In this post, we’re going to focus on giving you the information that you need, if you find yourself considering a move from renting to purchasing your own home. We are also going to talk about that information as it specifically applies to the current Greenville market. Ready?
There are many emotional and personal factors (such as wanting to customize your house, feeling grounded in a community, employment situation, long-term stability, etc.) that can and should substantially impact your thinking on whether or not you are ready to buy a home. Those aside, one of the biggest financial factors that can impact a home purchase long term is the interest rate of your mortgage. There’s good news and bad news here. Ever since the market crashed in 2007-2008, interest rates have been low—historically low, actually. The best rates were happening in 2012-2013, and since then, percentages have been rising, slowly but surely. Here at the end of 2018/beginning of 2019, we’re seeing average national interest rates in the 4.5-4.7% range, but housing authorities are predicting that the national average for interest rates will be rise to between 4.88-5.2% by the end of 2019.
How does that translate into real numbers? We’ll keep to the basics, and just say that a $200K house 4.6% interest on a 30-year loan ends up costing approximately $335K (that’s without including expenses like insurance, property tax, etc.). The same $200K house at 5% interest for 30 years will cost approximately $349K. In other words, the difference between purchasing a home now and purchasing a home this time next year could be $14,000.
In addition to rising interest rates, as the economy continues to thrive, the prices of homes are rising too. Demand is high and supply is low—nationally, but especially in markets like Greenville!—and that’s good for sellers but painful for buyers, especially first-time homebuyers. As long as the economy is growing, prices will keep climbing. So that $200K loan that you are approved for is going to buy a smaller and smaller house as time goes on.
That’s the financial picture and some of the numbers that go along with it. Back to what we said at the beginning: choosing whether to buy or rent is your personal decision! BUT if you’re thinking about buying, and you’re looking for information on how to move forward, we would love for you to come in for a consultation with one of our agents, so you can be equipped to make the decision that is best for you!