So.  You are asking yourself whether to rent or buy this year? Many folks are too.  I thought this would be a good chance to share a few words from the National Association of Realtors including an easy to use tool they provide to help answer exactly this question, "Should I buy or rent?".   This is a question most of us will face in our lives, whether buying a house makes more financial sense over renting a home.

There is a straightforward way to understand the financial impact of buying vs. renting. The® Rent vs. Buy Calculator can help you calculate the net cost of buying a home versus the cost of renting over time, thus taking some guess work out of your decision making process. 

For example, I keyed in the dollar values for purchasing a home in Louisville, Colorado at $525,000 versus renting in the same zip code (80027) for $2,950 per month. (The tool allows you to make your own choices).  After making various custom selections on what I could contribute for a down payment ($50,000) and what I would be expecting to pay for in closing costs, property taxes, and utilities, the tool calculated the cost comparison to that of my renting (including renter's insurance). According to my selections, I would be better off buying in about a year.  Below is the graphic depiction of what the tool generated for my hypothetical choices. took rent vs. buy

This tool compares net costs to the total amount of money you would be spending over time, minus the potential value you might receive if you someday sell the property. When you view the interactive graph you can see what this looks like at different times and how it compares if you were instead paying rent. From the tool, you'll see that the amount of time you plan on keeping the home has a major impact as well.  To get more personal, you can customize the advanced options to crunch more specific numbers and evaluate more specific scenarios. But keep in mind that a financial comparison is just one of many factors when deciding whether to rent or buy.

Currently in Louisville, Colorado the average home price is about $609,549 (this statistics includes condos, town homes, in addition to single family homes).  You can view LRA's January 2016 market statistics, which only include single family homes in Louisville and other neighboring Boulder Valley towns here.   If you are currently renting, there is another tool for cost comparison for rents in your area called Rentometer found here.  Even if buying a home won't be on your horizon for a year or two, use this time to look at homes and meet lenders who can help you secure a low interest loan. This is also an excellent time to start cleaning up any credit report issues (see LRA's blog on how to freeze your credit here.) 

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