That may not have ever been a question that was normally asked, but as home prices have appreciated anywhere from 3% to 12% (in Seattle), there is some serious consideration being given to which is the most prudent tactic when it comes to wealth accumulation.
Based upon the article published by CNBC, the rent-versus-buy decision may be swinging back toward the renter, as homes become more expensive and taxes and overhead continue to trend higher (especially in New Jersey, where property owners pay the highest property taxes).
According to the CNBC story, the Florida Atlantic University has factored home prices, rents, mortgage rates and a host of other factors and issued an index report that seems to favor, in some markets, that it is wiser to rent than to buy at this point.
Believe it or not, as an investment, the report indicates that it favors saving cash and investing that cash in the stock market, at least for the time being. The index points to New York City and Boston as still good buys, but places like Dallas, Denver and Houston are not so attractive.
According to Zillow, “The median home value in New York is $657,900. New York home values have gone up 13.5% over the past year and Zillow predicts they will rise 5.0% within the next year. The median list price per square foot in New York is $884, which is higher than the New York Metro average of $256.”
But home prices in Manhattan have been flat for the past couple quarters, so buying in the City is no longer a ‘sure bet.’
The average NYC resident’s paycheck is bushwhacked by taxes, in some cases paying from 7% to 12% in taxes. So if the real estate taxes aren’t getting you, the state, city and sales taxes make sure you know it’s New York City!
Much of the report is speculative, and projecting what it believes the future will represent. Still, the report sees 11 cities, which includes New York City and Boston, as ‘buy.’
Another 9 cities, including Minneapolis, Atlanta, Miami, Philadelphia and Los Angeles, are not as attractive to buy at this point.
It even points to Dallas, Denver and Houston as better for renting than buying, when it comes to creating wealth.
Still, the scarcity of available housing is making it a difficult decision to make: buy or rent?
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.