It’s always been my mindset to not be “salesy.” So much so, I almost didn’t get into real estate. I feared people would see me in the same negative light that I saw people who put their sales goals above how people should be treated.
As it so happens, the best Realtors are trusted advisors who serve their clients’ best interests above their own. Hurdle cleared.
Yet, I’ve been hesitant to publish certain messages that might appear self-serving. Telling people that they should buy a home rather than rent has been one such topic.
What is best for your situation does depend on a number of variables.
Earlier this year, I hit that topic with Louisville Rent vs Buy: Which makes the most sense?.
Last week, I read Steve Kaufman’s well-written piece—More young Louisvillians are renting the white-picket-fence American dream. Kaufman gathered expert opinions about Louisville’s current landscape from developers and investors. As it happens, these are the same people who gain when rents increase.
Just because Louisvillians are renting, does that mean they should?
Trulia, soon to be merged with Zillow, is an enterprise that grabs all available public records, then slices and dices them for mass consumption. Consumers should not rely on their property valuations, but they do publish worthwhile articles to help draw visitors.
One such piece is the newly updated Trulia Rent vs. Buy, which reports a whopping 38 percent better return on buying a home than renting one.
Buying is 38% cheaper than renting nationwide, and buying is cheaper than renting in all of the 100 largest metros. In fact, buying is at least 20% cheaper than renting under our baseline assumptions in all of the 100 largest U.S. metros except Honolulu.
Thirty-eight percent is quite the large number, don’t you think? Looking at the chart, Louisville does even better, landing somewhere in the 40-60 percent range.
(Make sure to hit their interactive map where you can customize mortgage type, tax bracket and expected years in home, to get a better feel for your personal situation.)
So here’s my question: Is this message being received by the general public? Public opinion is already on record saying that home ownership is a better long-term investment than even a 401(k) plan. But home sales numbers, while healthy, are far from exemplary. Given where interest rates remain—at historical lows—one would expect homes flying off the market, given the financial benefits.
Obviously, many negative forces are at play: unemployment, lack of wage growth, foreign uncertainties, and more. I’d be interested in learning from those who want to purchase a new home but haven’t, what is holding them back? Could it be financing? While a treacherous obstacle course to be sure, it is more readily available than it has been in years.
Rental rates keep moving higher in Louisville. And it appears most are willing to pay for the flexibility of a 12-month lease rather than purchasing a home purchase, even if the dollars tell us another story.