So are you moving to Atlanta (have you seen this guide to living in the interior vs. the suburbs?) And not sure if you should rent or buy? The good news is that you have chosen a very affordable city; in fact, of the top 100 subways, Atlanta ranks as the 60th least expensive subway in the country when it comes to rentals and the 45th least expensive subway in the country when it comes to housing prices, according to Trulia. To dig a little deeper:
- For a two-bedroom home, rents in Atlanta (median is $ 1,250 per month for a two-bedroom) are only $ 600 per month more than the cheapest city (Wichita), but almost $ 2,500 a month cheaper. than the most expensive city (San Francisco)
- For a two-bedroom house, prices in Atlanta (median sales price is $ 230,000 for a two-bedroom) are $ 134,000 more than the cheapest city (Detroit), but almost $ 830,000 cheaper than the most recent city. face (San Francisco).
Which is better financially: rent or buy?
We called in real estate expert Ralph McLaughlin, Trulia’s housing economist, for help with this. “Whether it is better to rent or buy ultimately depends on the circumstances of each home,” explains McLaughlin, noting factors such as the amount of money buyers have for a down payment, their credit rating, the level of taxes and how quickly with which they could move in.
“Each household must take into account its specific situation; even a small change in circumstances could make the rent cheaper, ”says McLaughlin.
How long will you stay?
Besides finances, the biggest indicator of whether it is better to rent or buy is how long you plan to stay in the home. As such, Zillow has calculated an equilibrium horizon for various neighborhoods throughout Atlanta by looking at how much it costs to buy a home and then how much it would cost to rent that same home, taking into account costs like mortgage insurance, utilities, and maintenance. Take a look at the balancing horizon for some of Atlanta’s most popular neighborhoods:
- Metro Atlanta: 1 year
- Downtown: .9 years
- Midtown: 1.1 years
- Buckhead: 1.8 years
- Dunwoody: 1.4 years
- Roswell: 1.1 years
So what does this all mean? Looking at all of Atlanta, a breakeven point of 1 year means that if you plan to stay in your home for more than a year, you are better off buying that home than renting it. In Buckhead, you will have to stay longer to reach that equilibrium horizon, which means you must rent in Buckhead if you plan to move again in less than two years.
Similarly, you can use Trulia’s Rent vs Buy tool to test some scenarios based on financial circumstances. Let’s say your target monthly rent is $ 1,250 (the median list price for a two-bedroom rental in Atlanta) and your target price for your home is $ 230,000 (the median price of a two-bedroom home for sale in Atlanta ). Let’s also assume that you are in the 25 percent tax bracket and your mortgage rate is 3.8 percent. Various amounts of time to stay at home are listed below to see which one is more affordable:
- 1 year: renting is 58 percent cheaper than buying.
- 3 years: renting is 14 percent cheaper than buying.
- 5 years : Buying is 9 percent cheaper than buying.
- 10 years: buying is 27 percent cheaper than buying.
- 25 years: Buying is 36 percent cheaper than buying.
Based on these numbers, if you plan to move in three years or less, it would be better to rent, but if you plan to stay in the house for five years or more, it is cheaper to buy.
Benefits of renting vs. to buy:
Life is about compensation, especially when it comes to real estate. While the benefits of renting include more freedom (no commitment to a mortgage), relatively low transaction costs (no down payment, fees, etc.), and less overhead (including maintenance, repairs, and taxes), there are a few downsides, says McLaughlin. Namely, “In Atlanta, buying is cheaper than renting.”
Plus, when you buy your home, you’re creating long-term wealth, especially if your home’s value appreciates over time, McLaughlin explains. Similarly, homeowners receive various tax benefits (they can cancel interest and mortgage insurance) and have more control over their space, as they can make modifications without permission.
Ultimately, buying is a risk, but it can be profitable. Just ask people who bought homes in Atlanta in 2011 and 2012, says Josh Green, editor of Curbed Atlanta. “From Kirkwood, to Inman Park, to Midtown, to Brookhaven, [these homeowners saw] tens of thousands of dollars, if not hundreds of thousands of dollars, in equity. But people who risked buying homes and condos in the 2005-2007 range had been singing a much sadder song until recently, when values finally began to return to where they were, before the bubble burst.