Having sold real estate for over 30 years, I am exposed to myriad life situations and choices my clients have to make for their real estate needs. Housing is a No. 1 priority since we have to live somewhere, right? Whether making aliyah, downsizing, upsizing or just expanding our current home, the reality of decision-making sets in. Your stage of life can be the main component driving the ultimate choice, so formulating a plan is important.
A young couple living in an apartment dreaming of their goal of a white picket fence are eagerly seeking to take the respectable plunge into home ownership, in contrast to empty nesters. Seniors who have owned their home many years may (or may not) be ready to eliminate the additional square footage they enjoyed over time, transitioning to apartment living where amenities, maintenance and upkeep are no longer a chore or expense. These are difficult decisions, but part of the choices we make throughout our lives.
Let’s consider the pros and cons of buying and renting, with finances always a necessary backdrop.
Why Should You Buy?
Buying offers you a chance to build equity and long-term wealth. While interest rates are high compared with where they were a few years ago, that shouldn’t keep you out of the market. There’s no way to know if rates will go up or down. However, even with current mortgage rates hovering around 6.92% to 7.05%, buying a home can still be a smart choice.
Although we painfully reflect back to times when rates hovered at 4% to 5%, beware there was a decade between 1980-1989 when average mortgage rates were inflated at 12.82%. In 1984 the average 30-year fixed rate was a whopping 13.8%. So be careful to count your blessings. Yes, rates have escalated in comparison to the early 2020s at 3.11% which increased to 5.34% in 2022, yet over time we don’t look back, and rates are cyclical and rebound back. If rates go down, the happy homeowner can also refinance to lock in at a lower rate.
Why Should You Rent?
Renting has benefits beyond the focus to save money in the short term for long-term goals.
Renting avoids the home maintenance and upkeep that could be pricey and time-consuming; homeowners can expect to spend between 1% and 4% of their home price on annual maintenance needs.
Renting offers flexibility to move at the end of your lease. For example, a couple making aliyah may choose to rent for a few years after they have sold their home while awaiting a housing development overseas to be finalized.
According to the October Rental Realtor Report, the median asking rent was down $23 and $40 from its August 2022 peak. With a steady increase in purchase prices, the 30% rule of expenses to income has been escalated to meet the demands of home ownership.
As an overall caution and depending on your life situation, renting does not allow for building the equity you would if you owned your home. An important consideration as well: You are at the behest of your landlord and essentially paying someone else’s mortgage while you accrue no long-term value.
Potential renters should weigh the short-term savings against the long-term opportunity to build equity.
You know what your situation is, and a professional realtor will provide the assistance to explore the market pertaining to your needs at the time.
Just some information in consideration: Reports of monthly snapshots indicate existing home sales increased as lower mortgage rates continue to boost market activity. The data from NJMLS show an increase of 4.1% over a one-year change in closed sales on all properties in addition to a 1.1% one-year increase in median sales prices of all properties, which continue to be promising for robust value of home ownership. To focus on average sold prices, varying results documented in each locale are an important factor as well.
Just to name a few, Bergenfield average sold prices in third quarter 2023 versus 2024 from $644,678 to $655,264, up 1.6%; Englewood average sold $717,405 to $1,095,596 up 52.7% third quarter 2024 versus 2023; Teaneck from $637,206 to $694,403 up 9%; and New Milford $645,719 to $730,155 up 13.1% change comparison in average sold priced homes category.
These facts can either be a booster or a deterrent to home ownership and rental choices. But remember, home is where your heart is wherever you are renting or buying. Pros and cons are always part of the fabric of decision-making, but most important, consider your combination of finances and needs since it is always the right time for choices to be made. So go for it. You’ll be glad you did!
Each cycle of life we embrace is a gift and blessing from Hashem so let’s welcome our housing choices at your stage of life’s decisions.
Praying for the release of the hostages and Am Yisrael Chai!
Ruby Kaplan is a realtor licensed in both New Jersey and New York. Visit rubykaplan.kw.com for more information. The Ruby and Bobby Kaplan/Keller William Town Life team will promote your home with the best of social media and create alerts for your criteria of housing needs. Your housing needs are our priority. Ruby can be reached at 201-314-4152 or on her cell at 917-576-4177 or at [email protected].
