Ahh, the age-old question in real estate – is it better to buy or rent your home or condo? Over the past several years, the national rental market has seen a boon as many people unable to qualify for a mortgage have sought rental properties for their new homes. 2012 and 2013 saw a large influx of investors into popular places to live (like the San Clemente Real Estate Market); these savvy buyers saw a great opportunity to cash in on low housing prices, higher inventories and widespread demand for rental properties. While purchasing a home or condo in San Clemente can feel like a daunting task, is it really better to take the simpler route and rent from someone else.
A recent article on Trulia (“Buying a Home 38% Cheaper Than Renting – But How Risky Is It?”) highlights a study from the real estate website showing that, in the 100 major metropolitan areas throughout the United States (including Orange County), buying a home is still cheaper than renting. The gap between buying and renting has decreased in the past year but still hold a good margin; for example, it is currently 21% cheaper to buy in Orange County than rent. This study takes into account the home price rises over the past year along with current mortgage interest rates. An interesting part to the article shows what the “tipping point” would be in each of the studied metro areas, meaning what would have to happen to mortgage rates in order for renting to become cheaper than buying. In Orange County, mortgage interest rates would need to climb to approximately 6.8% for renting to overtake buying as the more affordable option; this means that mortgage rates would have to rise almost 2.5 percentage points from the current 4.36% rate of a 30-year mortgage to reach this tipping point.
Owning a San Clemente home can be one of the most rewarding and lucrative experiences in your life if you are willing to take the plunge. Stop writing a monthly rent check to someone else – you will never see that money again. When you buy a home and pay your monthly mortgage, you are in essence writing a check back to yourself (minus the interest collected by your lender of course)…think about that before filling out your next rental application.