We’ve all heard the news: “The housing market is so-and-so”. “Interest rates blah-blah-blah”.
In 2021 the average U.S. home price increased 18.8%, with Fannie Mae forecasting prices to climb another 10.8% by the end of 2022. This, along with rising fuel prices and interest rates, has prompted potential homebuyers to consider their options and sent them searching for affordable housing alternatives.
Renting was previously thought to be reserved for individuals with little or bruised credit or for those seeking a temporary short-term living solution. Today the decision to rent a home for an individual or family and wait for the housing market to stabilize may be the best financial option.
Below are some of the benefits of renting a home.
- Repair and Maintenance Costs
One of the disadvantages of owning your primary residence is that you are responsible for regular maintenance costs, which can sometimes include costly major repairs. All major systems in a home have an average use life and while homeowners may have the best intentions, sometimes budgeting for appliance replacements or roof repairs can prove difficult.
As a tenant of a property, the homeowner or landlord is generally responsible for any maintenance or repairs necessary to the use and enjoyment of the home, that are not due to tenant negligence or damage.
- Fixed Monthly Rent
When you rent a home you typically sign a lease, whether it is with a private landlord or a property management company. Within that lease will be important information, including the length of the agreed lease, the terms and conditions, and a monthly rental rate. Assuming you have covered all of your bases, and your rent is paid on time, your monthly rent expense will be a fixed amount. Although rent increases can happen with proper notice, a fixed monthly rent amount makes it easy for tenants to budget and allocate housing funds.
*It is recommended that all tenants have a written lease agreement with the landlord that clearly outlines what is expected of both parties. Keep this document in a safe place and readily available to review. If you don’t have one, get one.
- Real Estate Taxes
Taxes…you can’t avoid them. Unless you can.
Tax-rates.org documents the median home cost in Wood County, OH at $154,600, with an average annual property tax of $2214. The average property tax rates for the State of Ohio make it the 13th highest in the U.S., according to Smartasset.com.
As a tenant, the real estate taxes associated with the property are the financial responsibility of the property owner. If municipal taxes increase or school levies change annual property fees the tax burden will lie with the property owner.
- Renting Provides Flexibility
Due to the current market conditions and abnormally high prices, home buyers can be limited in the areas they are able to purchase. Sometimes the only homes that are affordable are in less-desirable areas and concessions have to be made or plans adjusted.
Making the decision to rent a home can help alleviate that pressure. Although market rents are different based on the area the home is located, there is often more flexibility and affordability. You may be able to rent a home in the school system you prefer or near the natural parks and shops that you enjoy, rather than be located a further distance away from your work, hobbies, or interests.
- Avoid Property Value Fluctuations
It’s all over the news. Real estate values are at a record high and the market is volatile. It takes a Ph.D. in Macro-Economics to make a guess at property valuations today. Making the decision to rent a home during these unpredictable times may help to avoid the potential loss of equity, should the market begin to sharply decline.
- Lower Insurance Costs
Insurance can sometimes be hard to understand but think of it as a safety net in the event of a catastrophic event. Should an unforeseen accident by a property owner or tenant happen, or an “Act of God” destroy all or part of the property, insurance will help to cover some or all of the costs.
Based on the research completed by Bankrate.com the average homeowner’s policy in Ohio will cost $1383 per year or around $100 per month. The insurance premium for a tenant-landlord policy is significantly less and will help to financially protect the tenant in the event of an accident causing damage to the property. Most policies also have the ability to add a “renters insurance” option that will help to cover the loss of contents in the residence, with costs still being well short of the $100 per month average homeowners policy.
Purchasing a home may be a great option for some people. But, as you can see there are many benefits of renting to consider before making the decision to purchase a primary residence.
For more information on the current market conditions or to see a list of our available rentals please visit www.almarproperties.com.