Not Sure Whether to Rent or Buy? | Read This First
With mortgage rates rising, many prospective homebuyers are wondering if they should rent or buy a home.
To answer this question, I turned to NerdWallet’s rent vs. buy calculator to compare the costs/benefits of either option using the following key assumptions:
For other assumptions like property taxes (1.02% per annum), rent and home appreciation rates (5% per annum), insurance, etc. I used NerdWallet’s default settings. Like any model, the accuracy of the estimate will largely depend on the quality of the assumptions used which could materially differ from actual results.
The NerdWallet calculator, however, suggests that the approximate breakeven point between whether it is better to buy or rent a home is approximately six years (see Chart following). In other words, if you are planning to live in the condo for six or more years, then buying is the more cost effective/economical option. Conversely, if you are planning to live in the condo for less than six years, then renting is probably the better option all else equal.
Nanxi He is a real estate agent and a member of Team Coyle @ Compass.
About TEAM COYLE
Team Coyle, a professional group of real estate agents at Compass, has more than ten years of experience helping individuals and families buy and sell real estate in the Greater Boston Region of Massachusetts (primarily MetroWest).
