Be it ever so humble, there's no place like home. But in humbling times like these, is it better to own or rent a home? Upon speaking with experts in the real estate industry, it's clear that the answer differs for everyone.
"From a financial point of view, there is no longer any one simple answer to the rent-or-buy question," says Edith Lank, a syndicated columnist who has written on housing for more than 35 years. "All I can tell you is a firm 'it all depends.'"
Post-World War II, the nation was cultivating the new American dream of homeownership for all. With soldiers returning from battle wanting to settle down with their families, suburbia blossomed as these nuclear units became lords of their own castles.
But post-Iraq War and deep in the Afghanistan War, as well as after a Wall Street freefall, buying has fizzled out of vogue. People who seized flexible mortgage opportunities last decade soon found themselves underwater with their payments, leading to mass foreclosure and a renaissance of renting—seemingly because they had no choice.
However, Walter Molony of the National Association of Realtors sees a light at the end of this recession-riddled tunnel.
"For people with long-term plans, the rent vs. buy equation is tilting heavily toward buying because housing affordability is at record highs dating back to 1970," he explains. "Homes are undervalued in many areas—selling for less than the cost of replacement construction—and rents are rising at a faster pace. Many people are considering ownership now as a hedge against inflation."
The key phrase, Molony and Lank agree, is "long-term."
"If you want to adopt two German shepherds, rehearse with your garage band, plant tomatoes, put up a swing set, install a hot tub, settle down for the next 40 years—those are reasons to buy," Lank says.
As are the notions that a homeowner is free to alter his property however he pleases (within city construction guidelines, of course; try painting your rental purple, and see how the landlord likes that) and that there are tax benefits to buying.
Ginnie Mae's website (http://www.GinnieMae.gov) provides price charts that compare the savings of renting versus buying. Based on a $110,000 home with a $1,000 monthly mortgage, contrasted with an $800-per-month rental with an annual fee increase of 5 percent, "after six years, the homeowner's payment is lower than the renter's monthly payment," according to Ginnie Mae. Likewise, the website Trulia offers rent/buy comparisons within specific cities.
Furthermore, as Jim Gallagher wrote in the St. Louis Post-Dispatch recently, "mortgage rates are dirt cheap by historical standards." According to the government-backed Freddie Mac, the average 30-year fixed-rate home loan now hovers around 4.88 percent.
Molony notes that homeownership not only can be good for the individual but also can affect myriad others positively.
"When people buy a home, many related goods and services benefit, such as providers of carpeting, furniture, draperies, landscaping, home improvement, etc.," Molony says. "These are in addition to business activity directly related to the transaction process."
Jobs are indeed an important factor in the rent/buy conundrum. In touting renting, Yale University economist Robert J. Shiller recently told CNBC that buying could lead to a longer work commute, as affordability tends to increase the farther from metropolitan areas the home is. And this in turn can affect transportation costs, whether one drives or takes public transit. The assumed permanence of ownership also might hinder one's job hunt in outside markets, as his mobility might be stifled by the commitment to his mortgage.
Ultimately, whether the country is experiencing a lucrative baby boom or a weighty depression, the option to rent or buy a home lies in the hands of the individual.