Clearly the housing crash showed why not everyone should be a home owner. Even with rates at historic lows and prices at bargain values owning a home isn’t for everyone. I was contacted by a possible buyer the other day, he is a military recruiter and has a three year stint in a town and he wanted to know about buying. A three year time frame is at the minimum of what I would consider for owning a home. The main benefit of renting is not being tied to the home and having the freedom to leave when your lease is over or going month to month. Plus with a shorter time frame the impact of commissions and transaction fees are more significant.
What makes renting versus owning interesting in today’s market place are the dynamics. Rates are so low and prices depressed that owning makes economic sense. Now one can possibly own for smaller monthly payments than renting, especially since you can deduct the interest and real estate tax payments. For example, I have an investment home rented for $1,550 a month and it could be purchased with a monthly payment of $1,450 a month. Factor in tax savings for deducting interest and taxes plus possible appreciation and now owning has an economic advantage.
The housing crash increased demand for rentals. Consequently you will start to find them harder to find and they are becoming more expensive. I was able to increase my rent by $200 a month. Nationally vacancy rates are at an 11 -year low and average rents have increased from $974 in 2010 to $1,032 in 2012 (source Reis). If you don’t need flexibility and are thinking of staying put for 4 years or so you will find ownership attractive and you will find more options compared to renting a home.