Posts Tagged ‘rent’

Renting vs. Buying in Today’s Market

The current Hawaiian housing market remains fairly strong, although condo sales are down slightly in some areas. The state’s population continues growing, and foreign buyers make up a large percentage of those purchasing Hawaiian properties. The demand for Hawaiian housing still far outstrips the supply, and it remains an expensive place to live. Housing is priced at historic highs, and Hawaii is considered the least affordable market in the nation.

However, home prices did not rise by much in 2019, and are not expected to rise a great deal this year. Keep in mind that there are differences in market conditions and home values depending on the area.

The Argument for Buying

If you are considering relocating to paradise, whether renting or buying in today’s market is the best choice depends on several factors. Right now, mortgage rates are still low, so even though house prices are high, borrowing funds is relatively cheap. If you opt for a fixed-rate mortgage, you know what your monthly payments will entail for the next 15 to 30 years, or the life of your loan. Economic conditions could cause mortgage rates to rise in the near future, so locking in a low rate now is a smart move.

If the housing market remains strong, you are building equity in a dwelling that is likely to pay off handsomely when you sell, as long as you intend to live there for a significant period of time. For example, if you purchased the average-priced home in the state back in 2009, you would have paid $514,550. Sell that same property ten years later, and you would have received $733,125. During that period, the average price did decline for several years due to the effects of the Great Recession, so if you had to sell a few years after the purchase, you would have lost money.

The Case for Renting

Although mortgage rates are low, if you do not have a substantial amount for a down payment, preferably around 20 percent of the purchase price, you will end up paying higher rates and fees. Due to the expense, potential first-time homebuyers in Honolulu often find the dearth of affordable properties makes renting a more viable option.

With a rental, you do not have to worry about making repairs to the property or even to appliances, should they break down. That is the landlord’s responsibility.

Renting makes more sense for anyone who isn’t sure whether or not they want to stay in Hawaii. Moving is much simpler for renters than for anyone owning a home, although it is possible to rent out a home in Hawaii fairly quickly if you hire a good property management company. If you think you will stay in Hawaii for less than five years, renting is the better bet.

Contact Us

If you’re looking to buy or sell a home or find a rental property, you need a knowledgeable, experienced realtor familiar with every aspect of the Hawaiian real estate market. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.

Filed under: Blog by Freddy
Comments Off on Renting VS Buying in Today’s Market

Renting vs. Buying: Pros and Cons of Each

Should you rent a home or are you better off buying? The answer depends on your individual circumstances, preferences and your stage of life. The right answer to the question may prove different when you’re 25 as opposed to a decade later, and your financial status at any given time.

Renting

Pro: In terms of upfront costs, renting is less expensive. While you are responsible for the required security deposit and monthly rental fee, you don’t have to worry about saving up a substantial down payment, as occurs when purchasing property. Pro: If you want flexibility, you can simply move elsewhere at the end of your lease, rather than go through the often time-consuming and stressful process of selling your house.
Pro: Budgeting is simpler, since rent is a fixed amount.
Pro: The landlord takes care of any necessary property repairs, and in most cases, it won’t cost you a dime. There are exceptions, depending on the language of your lease and the nature of the repairs.
Con: The lease spells out restrictions on your use of the rental unit. Failure to abide by them can cost you the tenancy. Those restrictions may include having another person live with you if their name is not on the lease. If you bring a pet into a rental dwelling where animals aren’t allowed, you will probably have to rehome it if your landlord discovers you are breaking the lease.
Con: Rent increases at the end of a lease are often steep.

Buying

Pro: When you rent, that money is gone at the end of every month. When you buy, you build equity in your home with each mortgage payment. At some point, you may have enough equity to borrow against it in the form of a home-equity loan to pay for college, a car or some other pricey necessity. You can also make extra principal payments to own your home outright sooner. When you sell, you do not have to pay taxes on capital gains above a certain amount.
Pro: When you own your home, you aren’t subject to a landlord’s rules on pets, redecorating, remodels or other strictures that are an owner’s prerogative.
Con: You must make repairs yourself or call the appropriate professional when something goes wrong, and it is all on your dime unless there is a warranty on the item in question. Repairs and other house-related expenses can also blow a hole in your budget.
Con: While renters can get away with relatively cheap renter’s insurance to protect their belongings, homeowners must pay for home insurance, property taxes, water and sewer service and possibly flood insurance, depending on the area.

The Wild Card

One wild card in the decision to rent or buy involves the Republican Congress’ tax overhaul. States with high state and local property taxes, as well as high home prices – such as Hawaii – will suffer if property tax and mortgage interest deductions are limited. Buyers will have to factor in extra costs, while landlords will likely pass those additional costs onto renters.

Contact Us

If you’re looking to buy, sell or rent a home, you need a knowledgeable, experienced realtor. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.

Filed under: Blog by Freddy
Comments Off on Renting vs. Buying: Pros and Cons