The decision to buy a home versus rent is one of the biggest a person will make. It wasn’t so long ago that nearly everyone wanted to own a home, but after the housing crash, people haven’t been so sure. N.C. State University economist Mike Walden offers advice.
“And … this has been an amazing turnaround. Ten years ago, you couldn’t stop anyone from buying a house. Now people are having questions.
“Well, there are pluses and minuses, of course, to the decision of whether to own or rent. With owning, of course, you get to live in the space that you own, so you essentially get to do what you want. You get to modify walls, you get to paint, et cetera.
“Also, traditionally homeowning has been an investment — averages about a 2 or 3 percent rate of return a year. But, of course, that means the investment can go down. And, of course, people have seen that over the last five or six years, although things have stabilized recently.
“With renting, of course, you’re flexible. Certainly you have a lease, but after the lease you can leave.
“I go back to the traditional advice I’ve always given people in owning versus rent. I think it really comes down to how long you’re going to stay in the unit. If you think you’re here to stay especially — and by here to stay, I’d say at least five years — I think you should consider owning. I think over a five-year period of time you’re going to recoup, for example, the expenses that you’re putting into the house in terms of buying the house. I think over a five-year period of time now with the housing market, I think, stabilized, you will make money on the house. But if it’s less than five years, I’d strongly consider renting. I just don’t think financial numbers stack up. So, look at that time period and use that five years as a breaking point.”