We’ve all been there: everyone’s gathering at grandma’s house and the talk turns to housing. You’ve been a long-term renter and now family members are discussing the incredible increase in their home’s equity. All eyes turn down the table toward you and you begin to wonder: Should I continue renting or should I purchase a home?
As with most things in life, there’s no one-size-fits-all answer — it truly does depend on several important lifestyle and financial factors. Here’s some of what you need to think about.
Time and timing
“Typically, the longer someone stays in a home, the more sense it makes to buy,” said Deanna Devey, the Director of Communications & Operations for the Utah Association of REALTORS®. “As rent prices go up, your monthly mortgage payment (if you used a fixed-rate loan) stays the same, excluding increases in property taxes and insurance.” But, Devey said, it’s important to be aware of the fact that if you buy, you need to stay long enough to make up for the transaction costs associated with buying, noting that some experts recommend staying in a home for at least five to seven years.
On the other hand, if you think you might need to be able to move quickly, renting may make more sense because renting offers much more flexibility, e.g., you can move when a lease is completed.
Equity and net worth
James Cahoon, Director of Business Development/Loan Officer for Momentum Loans, believes that renting is preferable if you don’t want to maintain a property or your budget doesn’t allow you to handle the costs of owning a home. However, he added the following: “In general, homeownership is almost always better because you add an asset to your financial outlook. You should purchase a home as soon as you are financially stable enough to do so. In addition to building equity and stability, purchasing a home is a financial line of demarcation. Your entire financial outlook changes once you own a home.”
Devey agreed, explaining that a portion of each mortgage payment will go toward building equity in your home, meaning a homeowner will benefit from any equity gained should home prices increase. Speaking of price increases, Devey stated that in the last five years, home prices in Utah have increased nearly 81 percent, according to the Federal Housing Finance Agency. And here’s an important point regarding net worth: “Estimates from the Federal Reserve and National Association of Realtors find that the average homeowner had a net worth of $297,000 compared to a net worth of $8,000 for the average renter,” Devey said.
Meanwhile, renters do not gain personal equity; indeed, rental fees do not provide any financial traction for the renter — only for the landlord, lease-holder, management company, etc.
Upfront costs
It’s important to be aware of the upfront costs of purchasing versus renting. With renting, you’re most likely looking at a security deposit, perhaps two months of rent and maybe even a pet deposit to cover any mishaps from your beloved Fluffy and/or Fido. On the flip side, with buying a home, the initial costs can be hefty including the down-payment, closing costs, inspection fees, appraisal fees, possible broker/real estate agent fees and more.
Long-term costs
Fixed: With renting, you have a fixed monthly fee that is good for the term of your lease; lease-terms can vary from month-to-month to six months, etc., but are generally for one year. When buying a home, a fixed-rate mortgage amount is expected to be stable for the life of the loan which is often 30 years.
Variable: If you’re renting, your housing costs are usually confined to just your rent and any deposits. If you purchase a home, you need to take into account the overall cost of homeownership including maintenance, insurance, home improvements and the like. (Of course, these examples are related to rental-fees versus a mortgage and do not take into account an eclectic menu of variables such as utilities, etc., which are costs applicable to most all housing options excluding those in which the rental-landlord pays utilities.)
Potential tax benefits
Those considering homeownership should consult their tax advisor for information on any potential tax benefits. Why? “As a homeowner, you might be able to take advantage of the [tax] breaks for mortgage interest, property taxes and capital gains,” Devey said.
Lifestyle wants and needs
It’s relatively easy for renters to pack up their stuff and skedaddle off to their next living space; not so much for homeowners, since there’s a lot involved (physically, financially and yes, even emotionally) with preparing a home for sale and going through the sales process. Renters also might have a more transient lifestyle, may be subject to frequent work-related relocations without employer support or may not have decided on exactly where they want to commit to living and raising a family. But if you’re ready to ‘put down roots’ in a home and neighborhood, then purchasing a home and becoming an established member of a local community can make some serious personal sense.
Infographic to compare renting vs. buying
Decisions, decisions,
The conundrum of renting versus buying really comes down to two issues:
Financial goals: Although it comes with significant upfront and additional costs, a home is an asset that often (but not always…) increases in value, increasing your personal net worth. Rent monies financially benefit a landlord or property management company, not the renter.
Lifestyle: Renting offers more freedom and lifestyle flexibility than owning a home does. So ask yourself this: Where do you see yourself/your family in three years, five years, ten years and beyond? Do you picture the kids growing up in the same neighborhood, enjoying the same schools with nearby friends and family? The answers to those questions play heavily into the rent versus buy decision.
The bottom line
If you decide that purchasing a home might be the right decision for you/your family, Utah’s Number One Homebuilder®, Ivory Homes, is a great place to start looking. Here are a few communities in Salt Lake County and Tooele County where Ivory Homes is currently building new homes; move-in-ready homes are available in some locations. Visit https://ivoryhomes.com for more information.
Hidden Oaks Signature
6718 W. Hidden Elm Way Herriman, Utah 84096
801-307-6053 | From $570K
https://ivoryhomes.com/community-details/hidden-oaks-signature
Nestled on spacious homesites ranging from 8,000 to 15,000 square-feet, more than three dozen floor plans are available in this community. While some are larger and some are smaller, many of them feature interior space ranging from 3,500 to 5,500 total square-feet. Some are ramblers; some are two-stories; all are beautifully designed for gracious, comfortable living.
Three featured plans include:
The two-story Countryside Traditional is a new plan with a 3-car detached garage, 4 (up to 7) bedrooms and 4.5 (up to 6.5) baths. The home has a total square-footage of 9,054, with 5,476 square-feet finished.
For those looking for a spacious yet somewhat smaller residence, the rambler-style Carmel Farmhouse enjoys 3,150 total square-footage with 1,571 square-feet finished. Bedrooms: 3 (up to 6). Bathrooms: 2 (up to 3). Optional garage extension.
A different lifestyle option is the Alexandria Mining plan, which has 1 (up to 3) bedrooms and 1.5 (up to 2 full and 2 half) baths. Sleek and contemporary, this new rambler-style plan offers a total square-footage of 5,091 with 2,443 square-feet finished.
Juniper Estates
13608 S. Conie Bell Drive Herriman, Utah 84096
801-503-4752 | From $670K
https://ivoryhomes.com/community-details/juniper-estates#community
Recently released, the final phase of 35 homesites at Juniper Estates range from lot-sizes of 10,000 square-feet to an expansive 27,000 square-feet. Located near well-regarded schools, Juniper Estates is just 35 minutes from Downtown Salt Lake City. The community features a brand-new four-acre all-abilities park.
There are more than three dozen home-styles available at Juniper Estates. A trio of rambler-style plans includes:
Avignon Traditional
SF: 2,974 total; 1,433 finished
Beds: 3 (up to 6) | Baths: 2 (up to 3)
Wembley Prairie
SF: 4,089 total; 2,030 finished
Beds: 3 (up to 6) | Baths: 2.5 (up to 3.5)
Flagstaff Farmhouse
SF: 4,510 total; 2,234 finished
Beds: 3 (up to 6) | Baths: 2.5 (up to 4.5)
A sampling of two-story plans includes:
Revere Traditional
SF: 3,011 total; 1,963 finished
Beds: 3 (up to 4) | Baths: 2.5 (up to 3.5)
San Marino Craftsman
SF: 4,685 total; 2,758 finished
Beds: 4 (up to 7) | Baths: 2.5 (up to 3.5)
Bella Vista Mining
SF: 6,605 total; 4,001 finished
Beds: 4 (up to 8) | Baths: 2.5 (up to 4.5)
Hidden Oaks Collection
6718 W. Hidden Elm Way
Herriman, Utah 84096
801-307-6053
From $450K
https://ivoryhomes.com/community-details/hidden-oaks-collection
A sampling of home-styles at Hidden Oaks Collection includes:
1350 Farmhouse
Style: Rambler
SF: 2,812 total; 1,405 finished
Beds: 3 (up to 6) | Baths: 2 (up to 3)
1550 Farmhouse
Style: Rambler
SF: 3,243 total; 1,579 finished
Beds: 3 (up to 6) | Baths: 2 (up to 3)
2200 Farmhouse
Style: Two-story
SF: 3,879 total; 2,283 finished
Beds: 4 (up to 7) | Baths: 2.5 (up to 3.5)
Several additional plans, some rambler-style and some two-story models, are also available.
RIDGEVIEW ESTATES
4800 W Canal Blvd,
Highland, Utah 84003
801-753-7200
From $908K
This community is located right off I-15, which makes commute times convenient. It is also minutes away from great Alpine schools such as Lone Peak High, Mountain Ridge Junior High, and Highland Elementary. The Traverse Mountain Outlets are under 10 minutes away and feature many dining, shopping, and fun entertainment options. This community also has easy access to several golf courses nearby as well as Thanksgiving point. One of the most exciting parts about this charming neighborhood other than it’s breathtaking view of the mountain range is the future park and trail system. The park will house a pavilion for a picnic area, as well as a pickleball court. It is sure to be a great addition to the community, and it will be perfect for those warm Utah summers.
https://ivoryhomes.com/community-details/ridgeview-estates
CRANEFIELD ESTATES
2283 N Snowy Crane Dr.,
Clinton, Utah 84015
801-985-5555
From $515K
https://ivoryhomes.com/community-details/cranefield-estates
Cranefield Estates is a beautiful community in Clinton offering close access to shopping centers and Roy’s commuter rail system. Live right on the green, surrounded by the quiet of country living in this master-planned Club Ivory community. Enjoy lounging by the community pool and the peace and quiet of 137 acres of open space and a manicured golf course adjacent to the community. With over 50 different home designs to choose from, you can build your dream home in one of the best communities in Davis County. The community consists of a variety of home styles that appeal to all types of buyers, creating an ideal, diversified community for those looking to move into Clinton’s premier Community.
(Ivory Homes) A view into the Holbrook Scandia Cotages building site.
HOLBROOK SCANDIA COTTAGES
2408 N. Alesund Way,
Lehi, Utah 84043
801-226-4322
From $485K
Holbrook Village reflects on the best geographic elements of Utah, merging Scandinavian inspired architecture with Holbrook Farms’ beautiful and diversified layout. We’ve taken our favorite parts of Northern European architecture from Denmark, Norway, and Sweden and implemented it here in the Beehive Sate. Holbrook Village by Ivory Homes, Utah’s Number One Homebuilder® features unique plans with spacious layouts, outdoor balconies, and modern elements. Finished basements are limited - contact sales agent for details
https://ivoryhomes.com/community-details/holbrook-scandia-cottages
A sampling of home-styles at Hidden Oaks Collection includes:
The Bergen
Style: 2 story
SF: 2718 total; 2718 finished
Beds: 3 | Baths: 2.5
The Copenhagen
Style: 2 story
SF: 2164 total; 2164 finished
Beds: 3 | Baths: 2.5
The Oslo
Style: 2 story
SF: 2640 total; 2640 finished
Beds: 3 | Baths: 2.5
Ivory Apartment Homes
From Kaysville to Provo, our thirteen locations span the Wasatch Front, but regardless of which community you choose, you’re guaranteed to find perks that can’t be matched. Learn more about our communities below, and schedule a tour to experience our upscale apartment homes for yourself.