The real estate market remains hot in 2021. According to housing market data, existing home sales are up 12 percent (YOY), newly built home sales are up 37 percent, and home prices are up 16 percent. Due to the hot real estate market, many prospective buyers have wondered if they should hold off on purchasing a home. However, it may still be the right time to buy for many. Let’s take a look at the details.
Renting vs. buying: the basics
Renting a home is a much easier process and is less costly initially. There is also no long-term commitment as rental contracts are typically for 12 months. Buying, however, allows you to put down roots and plan for where you will live thirty or more years for now. It also allows you to start building equity, rather than paying rental prices that yield no future financial return.
The pros and cons of renting a house
Much like home sales, the rental industry has seen rising prices as well due to the high demand for rental properties and homes on the market. Renting a home is often preferable during a hot real estate market because there is no long-term commitment. For prospective buyers, it is a great way to wait (and hope) for rising home prices to come back down. The downside to renting is that you are likely to pay higher monthly prices for the same quality of house. However, budgeted into the higher price is the fact that the tenant does not have to cover most home repairs.
The pros and cons of buying a house
It is understandable for increased average home sale prices to give many prospective buyers pause about purchasing a new home. However, home interest rates still remain low as of July 2021. Many prospective buyers also have a lot of cash on hand at the current moment. If this is the case, then making the move to purchase a home now while your current financial outlook is strong could be the right move. This allows you to start building home equity, which is not an option when renting a home. The downside to buying a home during a hot real estate market is that the prices could start to decline as the demand for home purchases declines, which could occur later this year or in 2022.
Which option is right for me?
Whether renting or buying is the right choice for you depends on your current financial situation and your short-term and long-term goals. If you are in a good position financially with a fair amount of money in savings that can be used for a down payment, then purchasing may be the best solution. If the higher real estate prices are of concern for you, then you may benefit from waiting until the housing industry cools down, although there is no certainty that this will occur anytime in the near future.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129