The decision to rent/buy a home is one of the more difficult ones that adults have to make. The factors involved in deciding whether or not to purchase are nuanced, and shift according to economic climate, income, the housing market, and so on. Given these characteristics of the decision-making process, it’s important to err on the side of being too diligent (rather than not diligent enough).
Here are the factors you’ll want to consider in deciding whether or not to buy a home:
Home Price
Generally speaking, as the price of a property goes up, so too does the cost of renting it. After a certain price level, renting becomes too burdensome to warrant doing in the absence of better options, such as having enough savings to buy or the mobility to move into a less expensive area.
How Long do you Plan on Staying?
Because the upfront fees of buying are spread out to a greater degree the longer you stay in the home, it’s generally better to buy if you plan on staying for a long time. This is by no means the only factor, but it’s an important one to consider.
Maintenance and Fees
If you’re renting a property, there are a variety of fees you don’t have to pay that buyers are subject to. This would include maintenance, homeowner’s insurance, monthly common fees, and more, so be sure to calculate the costs of these fees before deciding whether or not to buy.
Renter’s Fees
Buyers aren’t the only people that pay fees for their housing- renters usually have to provide a security deposit prior to moving in, and are best served purchasing renter’s insurance as well. While the fees involved in maintaining a purchased home are generally larger than that of renting, you’ll want to factor both into the decision-making process.
Buying/Closing Costs and Tax Rates
It costs money to buy and close a home, and assuming you don’t intend on living in yours until the very end, you’ll have to do both! Don’t forget to calculate property taxes as well, and if you live in New Jersey, you really need to not forget this component of the decision-making process.
Future Rates
If you choose to purchase a home, not only will you be unable to use the money you put in for a down payment on investments (and you should not look at your house as an investment), but you’ll be buying something that is subject to growth/decline rates. Renter’s rates oscillate as well, and the rate of return on an investment is essentially guaranteed to change over time. Be sure to factor all of these rates into the process.
Source: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0