Whether it is nobler in the mind to suffer the challenges of renting or oppose them and buy, can always spark a great debate.  There are many sides to this argument and many details that you may not know.  The below information can hopefully help you decide which option is best for you. To keep it simple think about the three key words: math, time and desire. Does the math make sense now, will time force your math to make sense later or will desire override both?  If your lucky and smart you can hopefully get all three.

By analyzing the below data you will hopefully get a better idea on if it is worth it to buy a home now or in the near future.  Here is a breakdown of current costs associated with renting and buying. These numbers are approximations and are based on averages taken from real homes and apartments in Camarillo and Ventura.

Rental Costs, 3 bed 2 bath home

Camarillo

2 bed, 2 bath apartment- $1900 & $500 security deposit (taken from 1 average example)

*For the first year this apartment dweller will pay a total housing cost of- $23,300

3 bed, 2 bath Single Family- $2470 & $3000 security deposit (avg. of all current 3+2 homes)

*For the first year this house renter will pay a total housing cost of– $32,640

Ventura

2 bed, 2 bath apartment- $2200 & $500 security deposit (taken from 1 average example)

*For the first year this apartment dweller will pay a total housing cost of– $26,900

3 bed, 2 bath Single Family- $2699 & $3000 security deposit (avg. of all current 3+2 homes)

*For the first year this house renter will pay a total housing cost of– $35,388

 

Buy Your Own Home Costs

Camarillo

3 bed, 2 bath home price- $560,850 (average home current 3+2 home price in Camarillo)

*5% down payment- $28,000

*Closing fees- approximately $15,000 (typically includes 1st month’s payment)

*Monthly payment- $3800 (based on current rate of 4.375%)

*For the first year this home owner will pay a total housing cost of–  $84,800

Ventura

3 bed, 2 bath home price- $569,528 (average home current 3+2 home price in Ventura)

*5% down payment- $28,478

*Closing fees- approximately $15,222 (typically includes 1st month’s payment)

*Monthly payment- $3866 (based on current rate of 4.375%)

*For the first year this home owner will pay a total housing cost of–  $86,226

 

Now What?

By looking at the results above you will probably say that easy math dictates that renting saves you far more per year than buying since the monthly payment and total yearly cost is far less for renting.  This is true, however, the more difficult and important numbers to think about are included below.  This will help you get a bigger more accurate picture of what buying or renting does to you in the short term and long term:

Renting FIVE YEAR PICTURE

Camarillo

3 bed, 2 bath rental total yearly cost- $32,640

*Tax benefit $0

*Home appreciation benefit $0

3 bed, 2 bath  rental FIVE YEAR COST- $163,200

Ventura

3 bed, 2 bath rental total yearly cost- $35,388

*Tax benefit $0

*Home appreciation benefit $0

3 bed, 2 bath  rental FIVE YEAR COST- $176,940

Buying Your Home FIVE YEAR Picture

Camarillo

3 bed, 2 bath Home Purchase total first year cost- $84,800

*Monthly payment- $3800 x 12= $182,400 (total mortgage payments years 2-5)

*Tax benefit about $9,288 (First Year), about $3,000 (Every Year)

*Home appreciation benefit over 5 years 16% or $89,736 (assuming a good market)

*based on home value appreciation in the last 5 years in VC

3 bed, 2 bath  Camarillo Home Owner FIVE YEAR COST- $267,200

3 bed, 2 bath  Camarillo Home Owner FIVE YEAR BENEFIT- $99,024

   Camarillo Home Owner TOTAL FIVE YEAR COST- $168,176

Ventura

3 bed, 2 bath Home Purchase total first year cost- $86,226

*Monthly payment- $3866 x 12= $185,568 (total mortgage payments years 2-5)

*Tax benefit  about $9,437 (First Year), about $2,000 (Every Year)

*Home appreciation benefit over 5 years 16% or $91,120

*This is based on the home value appreciation in the last 5 years in Ventura County

3 bed, 2 bath  Ventura Home Owner FIVE YEAR COST- $271,794

3 bed, 2 bath  Ventura Home Owner FIVE YEAR BENEFIT- $100,557

       Ventura Home Owner TOTAL  FIVE YEAR COST- $171,237

Conclusions

3 bed, 2 bath  Camarillo rental FIVE YEAR COST- $163,200

3 bed, 2 bath  Camarillo Home Owner TOTAL  FIVE YEAR COST- $168,176

3 bed, 2 bath  rental FIVE YEAR COST- $176,940

3 bed, 2 bath Ventura Home Owner TOTAL  FIVE YEAR COST- $171,237

Now that some of the math is done what will you do?  While there are many other factors not included (home improvements, renters insurance etc.) this should be a start for you to decide what to do.  Do you believe that your home purchase will go up in value causing the time to be NOW to buy or not?  The two additional factors you must consider that are deeply personal are: personal motivation and risk tolerance.  Do you want to call that house your home?  Does ownership matter to you?  Do you believe that the housing market will remain strong or will it tank?  This is the part that can’t be quantified by numbers and you must consider your options by discussing with your close group of professionals: your Tax Professional, your Mortgage Broker, your Financial Advisor and your Realtor.  These are exciting times, take the time to consider your options based on your personal budget and what you predict will happen.

More Opinions from the Pros-The Wall Street Journal:

“To be fair, homeowners have to live somewhere and they have to pay rent to someone.  So they may as well buy and pay “deductible ” rent in the form of a mortgage payment.  After all, the government does cover a quarter to one-third of mortgage interest through the home-mortgage interest tax deduction.  No renter gets that kind of break.  And a homeowner gets the added benefit of enforced savings in that he is paying some principal and the property is appreciating over time.”  Basically, when you rent you get nothing when you leave, when you buy and sell in a good market you walk away with something, how much is the question.

Please contact me any time to discuss what YOUR options might be.

**Wall Street Journal quote from:

The Wall Street Journal:  Complete Real-Estate Investing Guidebook by David Crooks

**Apartment information provided by www.apartmentguide.com

**All residential information provided by FLEXMLS