People may see headlines like “It is Cheaper to Buy than it is to Rent” and they may accept that as fact. This could lead them down the wrong real estate decision-making path. There certainly are scenarios where buying could certainly beat renting. However, it's not a blanket generalization that should be made since so many factors can come into play.
A Trulia article mentioned a 10.5% interest rate still allows buyers to beat renters, but be wary of such all-encompassing statements. Using a mortgage interest calculator, such a rate on a $200,000, 30-year fixed loan would result in a total payment amount over the term of the loan of $658,612.29, of which $458,612.29 would be interest, versus the same loan at a 4.5% rate, where the total payment amount would equal $364,813.42, of which only $164,813.42 would be interest, a difference of $293,798.87.
Say you would pay just under $3,000 a year in property taxes. In another single-family home though, this amount could be $5,000 a year. Rates in many larger homes depending on the area are even higher or they could be $1,000 to $2,000 a year. So factoring property tax rates into the equation could make a significant difference in whether buying beats renting.
Most apartments never have an association fee or HOA dues. Association fee usually run $300 a month, and while it incorporates things like water, sewer and trash services, landscaping, and certain other amenities, so do most of the rents you will ever pay.
Rental rates and home appreciation levels
There are all sorts of other factors that can come into play in the "buy versus rent" argument. Geographic and regional factors -- even things in the same city or suburban area -- like weather, school districts, annual income averages, crime levels, available public transportation, infrastructure, available housing or rental inventories, and related items can make a huge difference in what living situation is best.
Therefore, before just accepting certain blanket generalizations about whether it's better to rent or buy, consider doing your own research on the area in which you'd like to live as there are many area-specific factors that can swing the decision one way or the other.
For more information on renting an apartment in Lynchburg, VA, contact Walden Pond Apartments.