PHOENIX — Buying a house may be a financial goal, but experts say right now the monthly math could favor renters. If the nationwide median rent of $1,700, according to Realtor.com, is roughly $500 less than the median mortgage, that’s a difference of $6,000 in a year.
A sparkling pool, athletic courts, a workspace; for many renters like Matt Nawrocki, it’s all part of the package, and without a mortgage.
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“You got everything you need,” Nawrocki, who rents an apartment in Scottsdale, Arizona, said. “With renting, the price of entry is the ceiling, whereas with home ownership, the price you pay is the floor.”
Keagan Huerta, Executive Vice President of Investments for P.B. Bell property management, says today’s market can give renters more leverage and some big incentives.
“We've seen a ton of new supply. It's put a little bit of downward pressure on rents, though. We're seeing, you know, a lot of concessions in the market, so it's not uncommon to see, you know, 8, 10, even 12 weeks free,” Huerta said.
Huerta says check the fine print, including amenity, internet, and other fees, before signing a lease. Look for deals in the summer and around the holidays, outside the big seasonal demand. Another savings opportunity: maintenance.
“To replace an HVAC unit on a house, you know, could be $5- 10- $15,000. If that happens in an apartment, it's covered,” Huerta said.
While rent can go up, owners face other costs that can fluctuate as well.
“You're also paying for property taxes, for homeowners’ insurance. Those things have been going up,” Jeff Ostrowski, Bankrate Analyst, said.
If you’re not planning to stay put, financial analysts also say renting makes even more sense.
“You're probably not going to make back your money if you sell in less than three to five years,” Ostrowski said.
There is a tradeoff: renters aren’t building home equity. So if renting saves you money, experts advise investing the difference.
“You might be paying $800 less a month, but you do need to make sure that you're putting that in a 401K or a brokerage account or you know some sort of investment vehicle,” Ted Rossman, Money Management International Principal Consumer Finance Analyst, said.
For Nawrocki, renting also buys something harder to put a price on: flexibility.
“I think a mortgage can be useful as a tool for forced savings, but if you have even modicum of discipline, you should be able to put a percentage away just fine,” Nawrocki said. “It gives me the flexibility to look at where my career could be going, and it gives me the ability to adjust and correct course as necessary.”
Look for our consumer report that addresses when buying a home can best pay off, coming up next Thursday.