In this economy, should I rent or buy?

Great question! We’re in a dynamic housing market that is challenging the validity of historical assumptions. It’s more important than ever to make a wise decision about renting or buying a home.

The cost of renting is soaring due to stricter lending requirements—fewer people are qualifying for mortgages these days, so there’s more demand for rental units.

At the same time, home prices are depressed and mortgage rates are near historic lows. It’s tempting to go bargain hunting and assume you will win in the long run.

Still, there are many variables to consider when making one of the most important purchase decisions of your life. Here are several factors you should include in your decision making process:

There are many variables to consider when making one of the most important purchase decisions of your life.


Remember the purpose of your home. It is a place to live. For decades, buying a house was considered an investment that would always appreciate in value. That assumption led many to overextend before the housing crash—and the result was serious financial pain. If the home meets your minimum needs, it is fulfilling its purpose whether rented or purchased.

Whether buying or renting, the temptation is to max out the budget to get the best we can afford. It’s a mistake.

Job Stability

In most areas today, the danger in buying is the loss of mobility. If you lose your job and must move to find a new one, you may find yourself stuck with a house that won’t sell. If your job is not relatively stable (an increasingly rare commodity in this economy) and you depend on it to make your mortgage payment, you’re likely not in a position to take on such a long- term obligation.


Whether buying or renting, the temptation is to max out the budget to get the best we can afford. It’s a mistake.

Keep to these rules and you can enjoy your home without worrying if you’ll be able to make your payments. 1) No more than 30 percent of your total budget should go towards housing—that’s rent or mortgage—including the associated costs of taxes, insurance and maintenance. 2) If you decide to purchase a home, make a minimum down payment of 20 percent. This will make it easier to sell your home if you must relocate for work. 3) Be sure you have an “Emergency Fund” of three to six month’s income saved and don’t touch it after you purchase your home. The temptation to dip into your savings to furnish a new home is nearly overwhelming. If you stick to the rules, you’ll likely avoid the financial nightmares that others have experienced since the housing bubble burst.

Also, make sure to seek advice about the housing market from several different sources of information, not just a single website or real estate agent. Proverbs 15:22 says, “Without consultation, plans are frustrated, but with many counselors they succeed.”

Many young people are becoming “renters by choice.” They enjoy not having the obligations of taxes and upkeep, and staying free to move about as needed for employment. They also enjoy amenities such as pools, tennis courts and exercise facilities that come in some rental communities that they could not afford if they purchased a home. Others see this market as the best opportunity to make a great purchase, capitalizing on low home prices and mortgage interest rates. Either choice will be a good one if you consider the factors I have listed here.

One last tip: Think small whether renting or buying. The average new home is now about 1,000 square feet per intended occupant. One hundred years ago the average was only 200 square feet per person. I foresee a glut of large homes in the future as baby boomers seek to downsize. Besides, smaller living quarters and lower costs will make your house feel like “home sweet home” regardless if you buy or rent.




Paul commented…

Love the last paragraph. I personally have a hard time balancing my motives. I want a house that I'll be able to resell in the next several years for a good price, but I also want a "home" and not an "investment."

Steven Davis


Steven Davis commented…

I live in the SF Bay Area. "Cheap" single family homes near me are AT LEAST $500k. I prefer to rent until I get married. Right now I share a 2 bedroom, 2.5 bath townhouse with a buddy of mine. We each pay $1050/month. Fine with me. Yeah, it's throwing money away, but so is paying interest on a loan, and so are maintenance costs, and PMI, and HOA, which I have none of.



danna commented…

It's not easy to make the right call in renting or buying, that's why your advices are more than welcomed in this economy. We should be able to learn from the past mistakes and also keep a close look to the real estate market evolution. There are some further guidelines and support on, they are worth considering as well. The renting and buying decision remains an individual decision and we should be able to asses our own situation the best we can.



annie commented…

If possible you should always try to buy your own home, you will have to pay rent anyways so why not make the same payments and get to keep that home in time? You should start with something small such as the homes on, then move gradually in larger homes. Anything is possible if you really want it.



martha commented…

Starting with a small home is always a good idea, you can always bring improvements or expand it over the years so don't be afraid to make the investment. Take a look on , you'd be amazed how much you could do about your home's design. You'll have fun seeing it transform over the years.

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