Is It Better to Rent or to Buy a Home?

The housing market has been on a scary ride for years now, so the question of whether to rent or buy has long-term financial implications, and the real answer changes from year to year. You may have seen a flurry of articles lately that say it’s better to rent now, but those I’ve read were written from the viewpoint of an investor, and did not take into account the fact that owning a home gives you a place to live for as long as you own it. That’s a big factor. According to an article in the New York Times, the answer all depends on where you live -or want to live.

Thanks to low interest rates and home prices that remain 13 percent below their 2006 peak nationally, buying continues to look like a good deal in much of the country. In the once-frothy markets of Phoenix, Las Vegas and Orlando, Fla., for example, the typical home price is still 30 to 40 percent below 2006 levels, even more if one accounts for inflation.

But across much of California and the Northeast, prices are now high enough that the costs of owning a home – property taxes, repairs, fees to real-estate agents and mortgage interest – may outweigh the financial benefits, including the tax break.

So if you want to live in San Francisco, you have to deal with the fact you’ll compete with others for available houses. Meanwhile, the same homes in Nebraska could be a bargain. They also have an online calculator that will tell you whether it’s financially prudent to buy or to rent. No, I could not rent a 4-bedroom, 3-bathroom house for less than $372 a month where I live, so it was well worth purchasing the house I have. And that doesn’t even take into account the joy of never dealing with a landlord, no rent hikes, or that glorious day when the mortgage is all paid off. -via Digg

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