Home prices are rising. Rents are rising. Housing simply costs more these days, no matter how you pay. So what’s best for you? Let’s consider some pros and cons.
Compare the Rising Rates
According to Realtor.com, the DFW area saw an increase in overall rent of 24.9% at the start of this year compared to one year prior. And there’s no sign that the trajectory will fall. On the contrary, Realtor.com reports a drop in vacancies for rental properties. That translates to less supply and more demand, which generally leads to higher prices.
How about the rise in home prices? While estimates vary by source, the increase in home prices is comparable to the increase in rent prices. A recent S&P CoreLogic Case-Shiller Home Price Index report puts the year-over-year home cost increase for the DFW area at 28.8%.
Differing Costs to Consider
With renting, one often saves more money in the short term. There’s usually little-to-no maintenance cost. Insurance for renters is more affordable than it is for homeowners, and renters don’t have to pay property tax.
When buying a home there are more up-front costs (talk to us about low or no down payment options to minimize these initial expenses), but when you select a fixed rate mortgage the monthly principal and interest home loan payment stay the same year after year. This means that a few years down the road your monthly housing costs could be considerably less than if you were still renting a comparable property.
Buying a home is a long-term financial strategy, costing more in the short term to benefit from home equity in the long term. Which is often considerable in the DFW area; Zillow reports that in May 2022, homes in the DFW market had increased in value by 29.3% in one year.
Look at Your Lifestyle
Beyond finances, how you wish to live is often a big factor in where you choose to live. Renting offers flexibility and the freedom to move without having to worry about the stress of having to sell a home. Of course, financially speaking, all you’ll leave with is your deposit. A home is more of a commitment. The Dallas Morning News reports that on average, Dallas-area homeowners stay in their homes for about eight years.
Is it better to build?
While there’s financing that perfectly fits new construction, North Texas homebuilding has been on a rollercoaster ride of late. The record-breaking construction of last year ran smack into labor and material shortages that contributed to a shortage of housing supply in 2022. Experts don’t expect the supply-demand imbalance to get resolved this year.