For Sale

               Buying or Renting?  It’s the age old question among many young adults and couples seeking a new home.  Buying a house can seem very intimidating and nerve-racking because of the permanent connotation attached to it.  Especially when you are living in a city where house prices seem high, renting is usually the option that many turn to.  However, the housing market in San Francisco (as well as other cities) is on a downward spiral.  Many prices right now are lower than normal because we have been coming out of a recession.  

               This graph shows the nominal and inflation-adjusted housing prices from 1987 until now.  The nominal price is the unadjusted price value.  The inflation-adjusted price is the new price or the real price that is adjusted to fit the economy due to different variables.  Housing prices have been on the rise from 1996 to 2006.  Since then, there has been a major decline due to changes in the economy at the time.  

               Many different factors play a part in the housing market.  Since we are in a recession, housing prices are lower than they could be.  This is actually considered a good time to buy homes because of the relatively low pricing.  Coming out of past recessions, housing prices have increased up to 20%.  The recession we have been in has been greater than recession periods in the past.  Since this recession is so extreme, when the economy finally fully recovers housing prices are projected to increase more than 20%.  There are many other reasons why right now is a perfect time to buy houses. Right now, renting houses is virtually more expensive than compared to buying houses.  Both renting and buying prices have increased since we have begun to see the light at the end of this recession tunnel, but renting prices have increased more.  Here is an article from the LA Times that explain how buying homes can pay after after an average of three years.  Mortgage rates are at an all-time low right now, which helps with the purchase of housing, including tax benefits.  Current mortgage rates can drastically affect the decision to purchase a house.

               Here is a cyber calculator to help calculate if buying or rent is better for you.  A great website to help you find available homes to buy OR rent is www.zillow.com.  For the most part, during this time period buying a home is more beneficial than renting.  There are many things to consider such as tax benefits and future values of home prices.  However, many people consider renting due to drastic changes in the economy that have already occurred by surprise.  It can be riskier to buy, but the bigger the risk--the bigger the reward.