19
Aug

TO BUY OR TO RENT A HOME?

“Should I buy or rent?” With the housing market steadiliy improving in San Diego and rents continuing to jump, this is a question more and more people are weighing these days. The real estate market has rebounded very strongly from the downturn of a few years ago and many first-time buyers are starting to dip their toe into the homeownership waters. If you’re starting to weigh your options, here are just a few questions you might be pondering as you decide whether to buy or rent.

What are some of the advantages of buying a home? Unlike renting, buying a home offers the opportunity to build equity over time, as a portion of each monthly payment goes toward the loan’s interest and the remainder pays down its principal. Also, several tax benefits are available exclusively to homeowners, such as homestead exemptions and federal tax deductions for property taxes and the interest paid on your mortgage. Future potential for rental income, more creative freedom with decorating your home, stability, sense of belonging and community are just as important benefits that homeowners will enjoy.

Can I afford to buy? This is a question at or near the top of every potential homebuyer’s mind. Buying remains a sound financial decision for those with documented income and a good credit history. A steady income can provide a strong backbone for the initial down payment and future mortgage payments. Along with a financial planner, an experienced real estate professional, like myself, can help you answer and uncover questions about the cost of homeownership.

Is buying a home a sound investment? With proper planning, a home purchase has historically proven to be one of the safest investments one can make. Along those lines, it is imperative to understand that investing in a home is much different than investing in a stock portfolio. Homes typically appreciate in value over time while the owner builds his or her equity through monthly mortgage payments. If you anticipate staying in a home for only one or two years, it doesn’t necessarily mean buying is not for you, but you are less likely to see a significant financial return on your investment.

 

Isn’t renting easier than owning? It is true that when repairs and maintenance need to be done on a rental, the responsibility falls to the landlord. If you are renting, you might even feel a bit like a homeowner by making routine repairs yourself, but there is one fundamental difference. Unlike equity built with each monthly payment, the rent you are paying is producing zero future financial benefit. Since most homes increase in value over the long term, a home not only provides a place to live but will ultimately provide return on your original investment.

Has the housing market completely stabilized now? The San Diego real estate market has been on the rise for the better part of the past two years with both average prices and unit sales rebounding strongly. In some areas and communities, prices have come all the way back to their pre-recession highs, but there are still great values in many neighborhoods around San Diego. Add to that interest rates that are still close to their all-time lows and most experts agree it’s a great time to buy.

How can I buy a house when there is so much competition? We all heard the stories of multiple offers, homes being bid up tens-of-thousands above asking, buyers swooping in with all cash?—?it’s a bit intimidating. The group of all-cash buyers and investors started thinning out a bit, following the craziness we saw in the past couple of years. Prices have leveled and multiple offers have decreased from months past. Some communities and areas of San Diego may be different in that respect, so please ask me for a detailed market analysis of the areas you are interested in. Homes are still going quickly though?—?all the more reason to work with a seasoned real estate agent who knows how to navigate today’s market.

The ups and downs of the real estate market have been in the news so much over the last few years that it can be overwhelming for those debating whether to jump into the market or not. I truly believe this is a great time to get into a home for all the reasons above. I’d be happy to talk with you more about your own personal situation and see if this is the right time for you, too.

Anca Savelio

CalBRE Lic# 01999055 Cell: 858-205-0121

Allison James Estates and Homes