This is the decades-old question of whether, at any given point in a market's upswing, is it better to rent vs buying in Austin. We often hear potential Austin home buyers saying things like "The Austin real estate market looks like it may peak and I'm wondering if I should wait until prices go down before I buy Austin tx real estate". Well, it's hard to time any market and, from the studies we've seen, why would you want to try?
As long as interest rates stay anywhere near the level they are at now, it will likely be better for consumers to rent a home in Austin vs buying a home in Austin. See this article from CNC where they state that in every one of the 100 biggest metro markets, buying a home was found to be the more affordable path over renting, providing you find a home you can afford and plan on staying in the home long enough.
As of December 2019, the average rent in Austin is $1,364 and the average tax base rate is 2.4% for Greater Austin. There are situations where renting is great, but if you have a stable income and you are serious in spending your money wisely, buying a house is a much better option.
The average cost of buying a home in Austin MSA is $327,500. Compare it to paying $1,364 monthly and deciding to stay in that rental area for the long-term, it’s like throwing away money. Another factor on why rent is not ideal for the long-term is because of inflation rates. Once inflation occurs, rental rates will adjust. But for mortgage payments, they are steady and fixed.
Even if they're prepared, some are hesitant to buy a property due to the amount of debt they'll get into but look at it as an investment. With renting, you're giving away your money to your landlord, but with buying, you're putting money into your own investment, your very own home.
Some people think that rent is much cheaper than buying a house, but when you look at it for the long-term, it’s not that ideal. Trulia, a real estate listing site, found out from their research that buying a house is more affordable than renting one especially to the millennials that are between the ages of 24-35 with a mortgage payment that is less expensive as 25%.
But of course, ask yourself some of these big questions to know if you are ready when it comes to buying a home in Austin. Look into your financial and personal situation if you are prepared to purchase a property. How long do you plan to stay within Austin/your residence? Do you have a stable job? How is your credit? Do you have an emergency fund? These are some questions you might want to ask yourself or you can also consult our Austin real estate agents to guide you by filling the form by the end of this blog.
The kicker here is that you actually plan on staying in that home long enough. I always advise my clients when they are searching MLS for homes, that they actually plan on staying in that home for at least 3 years, and even that is cutting it close. The fact of the matter is that we will have a recession at some point. It may not be next year but it will happen. And that's why we advise on 5 years to be a safer bet for appreciation and being able to sell your home with enough equity to move up in the house when you buy the next one.
Here's a great tool from Zillow that lets you see the rent vs buy calculations and how long you'll need to stay at a given property you purchased in order to break even as opposed to renting.
Buying a home in Austin provides you another financial advantage which is increasing your ROI. Since it’s your home, you have all the freedom! It’s now your time to invest in your newly bought home by enhancing and improving it throughout your stay.
Some of the best places to buy a home in Austin are the neighborhoods in 78704, to name a few, Barton Hills, Zilker, Travis Heights. It's the reflection of the "Keep Austin Weird" slogan, and if you want to experience the best of Austin, you got to check out the area or the homes in it. There are over 20 master planned communities in Austin such as Easton Park and Goodnight Ranch that offer the best of both worlds, the sense of belonging within a community plus the outstanding amenities they offer. There are also plenty of homes with the best views in Austin as well as walkable neighborhoods in Austin.