TIME advice

How to Decide Whether to Rent or Buy a Home

toy-house
Getty Images

Thinking about how long you'll be in the property

When determining whether or not you’re ready to be a homeowner, there are a number of factors to consider — several of which are personal, and hinge on exactly where you want to live.

“Many property experts would say that there are parts of the country where renting outweighs the costs of ownership,” says Brian Sergi-Curfman, a Realtor in Pittsburgh. “Potential buyers or tenants may find themselves in markets that are depreciating or, conversely, in areas where values have priced them out of the housing market. The decision to rent or buy should be influenced not only by market trends but by the client’s long- and short-term goals.”

Sheryl Grider Whitehurst, regional vice president for the National Association of Realtors, says home ownership rates are declining, having reached a peak at 69.4 percent in 2004. In the first quarter of 2015, the home ownership rate was 63.8 percent, which is the lowest it’s been since 1994.

“Young people are delaying buying a home due to student debt,” Grider Whitehurst says. “They just aren’t earning enough to carry a mortgage and the debt. Another factor is the economic crisis that occurred in 2007. People started losing their properties and have to get their finances in order to buy property again.”

And yet nationally, buying a home is 35 percent cheaper than renting, according to Trulia.com. With 30-year mortgage rates available below 4 percent, home ownership appears more affordable than many might think.

The economics of where you live certainly weigh heavily on the decision to buy or rent, but what other factors should you consider?

The pros and cons of renting

After 20 years of owning a three-bedroom, three-bath, two-story home on a steeply sloped lot, empty nesters Gay and Harry Stephens were ready to downsize. They now live in a two-bedroom, two-bath apartment in a building that was once an all-girls Catholic school in Newport, Kentucky.

“We wanted to rent because it’s easier to take care of and we have the ability to turn the key and walk away when traveling,” she says. “There’s no yard work, and someone else is now responsible when there are maintenance issues.”

Gay Stephens says the couple also likes their location and accessibility to favorite restaurants and entertainment venues in Northern Kentucky and downtown Cincinnati.

“I was surprised how much I enjoy urban living,” she says, adding that there are some negatives to renting, such as slow response times for repairs and not building equity through their housing costs.

Other disadvantages to renting can include unanticipated rent increases, non-renewal of a lease, and not being able to customize the living space.

“On the other hand, you’re not tied to the property nor do you have to come up with a down payment and closing costs to live there,” says Realtor Josh Bushner in Austin, Texas. “If you’re new to a city or not sure you’ll be there for longer than three years, I usually recommend renting until you’re certain you’ll be staying longer. Also, make sure coming up with a down payment won’t put you in a cash-strapped position. Take time to get familiar with a city and find neighborhoods that will meet your lifestyle.”

Elizabeth Cales of Clarksville, Tennessee, says that despite being financially secure enough to purchase a home, she’s happy to rent.

“It’s a buyer’s market here,” she says. “You can get a mortgage for $650 a month, which is what we pay in rent, but with my husband’s work we’re not sure we’ll be here in three years. We don’t want to take a loss on a house we might not be able to sell.”

Cales says one of her favorite aspects of apartment living is the close-knit community, so much so that the Angie’s List member gave her complex a positive review. “The neighbors are all close and it’s just nice,” she says. “I feel more secure having people around.”

The pros and cons of owning a home

Home equity is one of the biggest assets to buying instead of renting. In addition, most buyers can obtain tax benefits by writing off real estate taxes, mortgage interest, and specific closing costs, whereas renters don’t typically get federal tax deductions. Although, some states will offer a tax break for renters.

In addition, house renters often don’t realize that they’re paying the principle, interest, taxes, and insurance (and usually some extra padding for landlord repairs) in their monthly payments, which could be put toward building equity in their own homes.

Newlywed Leslie Radigan-Yodice of Albuquerque, New Mexico, initially thought she and her expanded family would move from an apartment into a rental home, but after figuring out the finances, they decided in the summer of 2014 that it was a great time to buy.

“My monthly payment is about $300 more, but we have a four bedroom, two-bath house with a garage,” she says. “I love that we’re building equity while creating a true home. And I love that I don’t have to walk across the street to do my laundry.”

Sometimes, the decision to own a home comes down to certain intangibles.

“While there’s definitely a strict financial answer to whether it’s better to rent versus buy, don’t discount the emotional part of the process,” says Deb Agliano of Re/Max Andrew Realty in Medford, Massachusetts. “For some people, it’s not a matter of what makes more financial sense, emotionally they want to know that they own their own home.”

Mary and Garret Goetzinger of Portland, Oregon, say owning their four-bedroom Craftsman is a welcome change after 15 years of renting.

“Being able to create your own space and freedom to design it however you want is a positive,” the couple agree, noting that they did have to move a little farther out than they anticipated to get the house they wanted. “Owning a home isn’t cheap, and we’re on the hook if something goes wrong.”

Handling the maintenance, upkeep and repairs is one of the biggest differences for Janice Pare and her husband Gordon Wichern, who recently purchased a three-bedroom Cape Cod in Arlington, Massachusetts.

“One other negative is the lack of flexibility to move whenever and wherever we want with just 30 days notice,” Pare says. “But we feel that being homeowners makes us more invested in our community, and we plan to get more involved in our new part of town.”

Deciding to buy a house is a big responsibility, and potential homeowners need to answer some serious questions before taking that leap, says real estate agent Dianne Hansen in Fairfax, Virginia.

“Will it give you a sense of pride?” she asks. “Are repairs stressful or something you’re willing to learn to do? How long will you be in the house? If it’s less than two years, it might not be worth buying. If you’ll be there five or more years, it’s a good bet.”

So … rent or buy?

After weighing all the factors, it might come down to what will make you happy.

“If you’re not sure if you want to buy or rent, think about the enjoyment you will get out of owning your own home,” Hansen says. “If there isn’t any, you might want to rent for a few more years.”
Sergi-Curfman agrees, and says no one should frown upon the idea of renting.

“The American dream has always included the white picket fence surrounding a house in the suburbs, but for many people, this dream is really a myth,” he says. “Renting should never be looked at as inferior to owning a home. You and only you know your goals best, and it is incumbent upon any potential buyer or renter to seek out professional advice from people that they trust to give them a fuller financial picture of their current and future goals.”

Yet, Grider Whitehurst says despite the potential attractiveness of renting, most people want to own a home at some point in their lives.

“Overwhelmingly, Americans see home ownership as a good investment,” she says. “You have to pay to live somewhere — whether you rent or own. You just have to know when is the right time for you.”

This article originally appeared on Angie’s List

More from Angie’s List:

MONEY housing

U.S. Homeownership Drops To Its Lowest Level Since 1967

aerial view of neighborhood
Jake Wyman—Getty Images/Aurora Creative

The last time homeownership levels were this low, LBJ was president.

Data released by the Census Bureau on Tuesday reveal that the U.S. homeownership rate stood at 63.4% for the second quarter of 2015. The rate is down slightly compared to the first quarter (63.7%), and it represents the lowest level of homeownership in America since 1967. If the homeownership rate drops just a few more tenths of a percentage point, it would reach a new all-time low since the government began tracking such data in 1965 and the rate was a flat 63%.

In fact, some housing experts say it’s fairly likely the homeownership rate will continue to fall and will indeed hit a record low in the near future. “We may have another percentage point to go before we see a bottom” in terms of the homeownership rate, Mark Vitner, senior economist with Wells Fargo Securities, told Bloomberg. “We’re still suffering the effects of the housing collapse and the financial crisis.”

The bull market and an improving jobs picture would seem to bring with it rising homeownership levels. Yet as a recent Harvard study pointed out, many would-be homeowners—particularly younger ones, in their 20s, 30s, and 40s—are still struggling in the aftermath of the Great Recession. Wages have been stagnant for the middle class, and many households are cautious about jumping into homeownership in the face of hefty student loan debt and memories of being burned in the housing crash. Rising home prices don’t help ownership levels either.

All combined, these forces are conspiring to make renting seem like the wiser option over buying lately.

For the sake of comparison, the 50-year average for homeownership in the U.S. is 65.3%. The rate rose through the 1970s and early 1980s, before dipping to around 64% or slightly under in the late ’80s and early ’90s, a period marked by economic downturn in much of the world—and a recession that lasted eight months in the U.S.

Fueled by easy credit, a booming economy, and boundless optimism, the homeownership rate soared in the late ’90s and early ’00s, nearly hitting 70%. The 69.2% homeownership rate of 2004 is currently the all-time high. Based on how things have been going, it very well could remain as the record high for years or even decades to come.

MONEY Family

The Hidden Upside to Living With Mom and Dad

Recent college grads may think living at home is less than ideal, but it has its advantages.

CNN’s Christine Romans thinks it’s the perfect solution. If you’ve just graduated from college, there’s a good chance you’ve got at least a little bit of debt. Romans advises you to take a year at home to save up money, start paying off your loans, and get on your feet financially. But don’t stay forever, she says. Make a plan – you can even sign a contract – with your parents on what responsibilities you’ll take on, and how you plan to be out of the house before two years are up.

Read next: Why Millennials Are Better Off Waiting 10 Years to Buy a Home

MONEY renting

How to Make Sure You Get The Full Security Deposit Back From Your Landlord

Andrea Artz—Dana Tezarr

Leave the place just like you found it.

If you’re a renter, or in the market for a new rental, one of the biggest pain points when it’s time to move is the return of your security deposit. Given that your initial deposit may have been anywhere between one and two months’ rent, it’s important you take the necessary precautions to ensure you get most of your money back!

Here are a few suggestions from Trulia to avoid losing a rental security deposit.

1. Take photos (or video!) when you move in

The first step to protect your deposit happens when you move in to your new rental. Walk through the unit with your landlord and take photos (or video) of every nook and cranny. Your photos should depict the space at the “macrolevel” (entire rooms) as well as the microlevel (get close-ups of any existing damage).

Email the files to your landlord on the same day, so that you both have digital, time-stamped documentation of the condition of the property at move-in. If the video files are too large to email, send them to your landlord via Dropbox or upload them to YouTube as private videos.

Your landlord will appreciate this gesture, as you both share the same goal: You both want solid documentation during move-in so that you won’t get into a brawl during move-out. Your landlord wants the property restored to its move-in condition, so the more you can “prove” that move-in condition, the better — for both of you.

2. Give ample written notice

Your lease might specify the amount of notice you need to give your landlord before you move out — usually anywhere from 30 to 60 days. Your lease will also specify what types of communication are acceptable forms of notice. For example, you might need to send your notice letter or an email to a particular address. Make sure you comply with the exact requirements as written in your lease — or else you may find that you’re breaking the terms of your lease.

Your lease doesn’t specify anything about move-out letters? Be sure to ask your landlord before you move in how much notice you’ll need to give — and get their answer in writing.

The reason your landlord keeps this provision in place is so that they have enough time to conduct showings of your unit before you move out. Vacancy is one of the biggest expenses that drain a landlord’s wallet. The more you can help reduce vacancy (by giving plenty of notice), the better.

3. Don’t obstruct showings

Don’t be obstructive or difficult when your landlord tries to set up showings for new tenants. For example, don’t insist that you must be home during every showing, forcing your landlord and the potential new tenant to work around your schedule. Don’t change the locks. Don’t leave your house as a giant mess — but don’t leave valuables out either.

Some leases include provisions that state that the landlord can charge you if you’re unnecessarily obstructive during showings. And even if your lease doesn’t assess a penalty, it’s still good diplomacy to be accommodating. The easier you make your landlord’s job and reduce their out-of-pocket costs (including vacancy times), the more likely you’ll be to get your deposit back.

Bonus: You’ll also get a good rental reference out of the deal.

4. Ask for the master paint

Did you hang artwork, curtain rods, or a wall-mounted TV in your unit? If so, then you’ve probably put a few holes in the walls. Those holes will need to be filled and painted.

Before you move out, take a trip to the local hardware store to pick up some spackle to patch those drywall holes. Then ask your landlord for the precise paint color, including the SKU number and brand name/finish.

You should know that you’re specifically searching for “Ivory Invitation” in an eggshell finish or “Realist Beige” in a flat finish.

Chances are, your landlord will repaint before the next tenant moves in. But by cleaning up nicks and generally refreshing the wall paint, you’re more likely to have a smooth final walk-through.

5. Clean the carpets

When it comes to wall-to-wall carpets, an ounce of prevention can equal several hundred dollars in cure.

Lay a rug near your entry door, where you can wipe dirt, mud, and snow from your feet before you start tromping across the carpets.

Vacuum regularly while you’re living there. If you can, make a practice of walking indoors without shoes, which extends the life of carpeting.

While you’re at the hardware store picking up the master paint, rent a steam cleaner and deep-clean your carpets before you move out.

6. Don’t leave anything behind

The last thing that your landlord needs to handle is dealing with your stuff after you move out. Take everything with you when you go; don’t leave any of your personal possessions behind.

This is an extra-essential point. In some states and municipalities, you’re not considered “moved out” until your personal possessions have also vacated the premises, which means that your landlord might be able to charge you rent for the length of time that your stuff remains in the rental unit.

In many states, your landlord must also endure the process of legally evicting your possessions. (Landlords are subject to strict rules for handling a tenant’s belongings.) This means that if you leave personal property behind, you may have an eviction on your credit record in addition to liability for several months of back rent.

Bottom line? Take your stuff with you. (All of it.)

More From Trulia:

 

MONEY renting

9 Apartment Hunting Traps to Avoid

86288467
Tom McGhee—Getty Images

It's moving season!

Looking for a new apartment to rent? Spring and summer are moving season for many renters. It’s also a time filled with excitement and hope — the hope that the next place will be better than the last. I’ve been there.

Fortunately, a lot of the problems that plague renters can be avoided just by choosing that apartment a little more carefully. Here are nine apartment hunting mistakes to avoid while you’re looking.

1. Assuming That Moving Will Solve Your Problem

As a renter, it’s easy to get used to moving; new year, new apartment. Unfortunately, that new lease often means a new set of problems. Moving is stressful and carries a long list of expenses. Before you decide to move to where the grass is greener, consider whether you’re really that unhappy where you are. Every living space has its pros and cons. Decide whether you can live with your apartment’s drawbacks before moving on to a new set of problems.

2. Falling in Love Too Soon

These days, apartment hunting usually begins online, where you can browse through photos of apartments for rent in your area. There’s nothing wrong with doing a little previewing before you go out to view these places in person; just keep in mind that in many cases, photos tell very little. Not only will landlords do their best to make their rental units look attractive, but photos also lack a lot of detail. A rental unit that looks super cute and cozy in a photo, might turn out to be much shabbier in real life. The problem is, if the photos put stars in your eyes, you might already be in love.

3. Failing to See the Big Picture

Before you set out to look for a new apartment, think about what’s really important to you. Are you looking for a short commute to work? Proximity to certain amenities such as shopping, parks, or public transportation? It’s important to understand the big picture in terms of what you want out of your apartment, to size up each apartment as a whole. Otherwise, you’re likely to zero-in on smaller, less important details, like the size of the unit, the decor, or fantastically cheap rent.

4. Allowing Yourself to Be Wooed by Fancy Fixtures

Fancy fixtures like hardwood floors and granite countertops are great, but when you have a budget to stick to, it’s best not to be too fixated on what are essentially details. For one thing, these amenities are purely aesthetic, and will quickly lose their luster if the apartment fails to meet your needs in other key ways. Plus, in many cases, apartments in less desirable locations get the best cosmetic upgrades to entice renters. If you wouldn’t live in this apartment if it didn’t have fancy fixtures, you probably shouldn’t move in just because it does.

5. Going Out of Your League

Before you start looking for an apartment, you have to decide how much rent you are capable of paying. Most financial experts recommend that you spend no more than 30% of your take-home (after-tax) income on housing. Depending on your other financial obligations — and your personal financial goals — you may want to spend even less. But no matter what price point you decide on, once you have a number in mind, stick to it. And do not, under any circumstances, look at apartments that exceed your budget. Chances are they will be nicer. As a result, they will make the places you can afford look much shabbier in comparison. They might also tempt you to blow your budget.

6. Failing to Read the Rental Agreement

I once signed a rental agreement that stated that I was responsible for repainting the apartment before moving out. I was a student and had never painted anything in my life. Of course, I lost most of my damage deposit on that one. Rental agreements lay out, in legal terms, what you as a renter are responsible for. Read every word carefully and make sure you’re up for it. If you aren’t, move on.

7. Overlooking Existing Damage

Most rental agreements include a damage deposit. This is money that the landlord holds in order to pay for any damage the tenant may cause during the term of the lease. This can get tricky if you don’t document any damages that were already there when you moved in. On the day you get possession of your apartment, walk through it with your landlord and document existing damage to ensure you are not charged for them when your lease is up.

8. Not Considering Roommates Carefully

I’ve been lucky to have really good roommates, but living with other people is still hard. When you share your personal space with someone, you get to know each other on a pretty intimate level. Things can get ugly. So try to choose your roommates carefully. There are different philosophies on this. Some people think it’s best to choose a roommate who isn’t a friend. Others say it’s best to room with a bestie. Either way, make sure you get some references to ensure that your roommate has a solid history of paying their rent.

9. Not Vetting Your Landlord

Some landlords care about their properties and their tenants. They’ll take your calls and fix leaking toilets and send an exterminator in to deal with your ant problem. Other landlords treat their tenants like cash machines; money is withdrawn, never to be seen again. If you have problems with your apartment, a bad landlord can make your life hell. I once tip-toed across a bridge of soggy cardboard boxes for weeks until my landlord got around the fixing a leaking hot water tank that flooded my apartment. So, be sure to run a check on your landlord before you sign a rental agreement. Do a Google search, ask if you can contact previous tenants, and check with the Better Business Bureau to see if any complaints have been filed against the landlord or property management company. If you discover serious issues, find another place to rent. Dealing with an uncooperative landlord just isn’t worth it.

What apartment-hunting mistakes have you made? How did you learn your lesson?

More From Wise Bread:

 

MONEY moving

7 Ways to Reduce Stress During a Move

554992005
Getty Images/Hero Images

Moving can be challenging — but it doesn’t have to be a stress fest.

Whether you’ve decided to accept a new job offer in another city, found the perfect apartment on Trulia, or finally closed on the home of your dreams, a fresh start is always exciting. Packing all your belongings into boxes and lugging it all to a new home? Not so much.

We get it. Moving can be crazy and stressful — but there are ways to survive the process without aging yourself prematurely.

Here are seven ways to manage your stress before, during, and after you’ve boxed up your life.

1. Purge

Clutter creates stress. Minimize the junk clogging your closets and you’ll automatically breathe a sigh of relief. Clear the clutter from your home by organizing things you no longer need into three piles: Sell, Donate, and Toss.

Put big-ticket or valuable items in the “sell” pile. Then snap some photos and list them on eBay, Craigslist, or Facebook. (Or go old school if the weather’s nice and hold a massive yard sale.)

Score a tax deduction by donating items to Goodwill or a local thrift store. Throw away or recycle any items that have little or no use left in them.

Here’s the most fun part: Eat through the contents of your refrigerator and pantry. Spend the weeks prior to your move creating oddball meals based on whatever happens to be in your cupboards. And don’t forget to drink all your booze!

2. Clear your calendar

Block off a chunk of time to focus exclusively on packing. Request a day off from work, find a baby sitter or family member to watch your children, or clear your schedule for a weekend. You’ll get more done by packing continuously for several hours than you will by packing in short bursts of time.

If possible, bribe some of your friends to help. Promise to buy them dinner and drinks if they’ll donate a few hours of their time to help you pack and move.

3. Accumulate boxes

Start accumulating a stack of newspapers and boxes several weeks prior to your move. Ask friends if they have leftover boxes from previous moves or visit local grocery stores and retail outlets, walk back to where the employees unpack the inventory, and ask if you can walk off with a stack of boxes. Costco and Trader Joe’s both keep a steady supply of boxes in-store.

If you’re willing to splurge, you can buy boxes from shipping and packing stores or your local home improvement store. The benefit to buying boxes is that they’ll all be standard sizes, making them easier to stack and load.

4. Plan

Don’t start packing without a strategy. One of the most efficient ways to pack your belongings is to methodically move from room to room. Clearly label each box based on where in your home it was packed. This way, when you unload boxes in your new house, you’ll know where each box should go.

5. Protect your valuables

The last thing you need is a nagging concern that you can’t find your wedding ring and passport. Those worries will stress you out more than almost any other aspect of moving!

Pack one suitcase as if you’re going on vacation and include the items you’ll need to immediately access, such as clean underwear, socks, and a toothbrush. Add valuables and the most important documents so that you’ll know they haven’t gone missing.

6. Give ample time and deadlines

Nothing is more stressful than knowing that you can’t start moving into your new home until 8 a.m., but you need to be out of your apartment at noon that same day.

If you can, allow for your time in each place to overlap. This may mean paying two rents or two mortgages for up to a month, but it will allow you the benefit of time — and that will work wonders on your stress levels.

Also, create minideadlines for yourself. Promise yourself that you’ll pack up one room per day, or that you’ll unpack for two hours per night after you move into your new home.

7. Delegate

Finally, the best way to reduce stress is by outsourcing and delegating. Use online resources like TaskRabbit and Craigslist to search for people who can help you pack and move. Before they leave, ask them to help assemble furniture and move big boxes and furniture where you want it.

As the saying goes, many hands make light work. And when you’re moving, you need as many hands as you can get.

Read next: How to Be a Dream Tenant and Snag Any Rental You Choose

More From Trulia:

MONEY renting

Renters In These Cities Pay the Most for Washer/Dryers

in-unit-laundry
Flickr RM/Getty Images

In some markets, a washer and dryer in your apartment can cost an extra $325 per month.

In-unit laundry: it’s the ultimate rental luxury. Most of us are forced to trudge to the basement if we’re lucky, or drag our clothes to the nearest laundromat. It’s enough of an annoyance to make even the most frugal renter wonder just how much would it cost for the ability to wash and dry clothes in the comfort of their own apartment.

Thanks to real estate website Trulia, we finally know the answer to that question—at least for some major cities. After analyzing large multi-family buildings listed for rent on its site, Trulia’s researchers found apartments with in-unit washers and dryers command a 10% per month premium on average across 13 top metro areas.

But while that might be the average cost for in-unit laundry, the actual price varies widely. Philadelphia pay an average premium of 20% on their rent bill—or $211—for their own washer/dryer, while Dallas-Fort Worth renters pay a paltry an average of 3% of their rent ($33) for the privilege.

And which city hosts the cheapest (and most expensive) in-unit laundry in dollar terms? Los Angeles has the dubious honor of being the priciest out of the 13 metros Trulia surveyed, with washing and drying machines costing renters an average of $325 per month. Meanwhile, Seattle is practically handing out washer/dryers to renters. Trulia found in-unit laundry in the Emerald City cost renters only $23 extra per month.

in-unit-laundry

If the laundry premium in your city sounds fair, you’re in luck. Trulia has even mapped out the neighborhoods where in-unit laundry is most common.

TIME Innovation

How a Little Bribery Could Be a Good Thing

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

These are today's best ideas

1. A little bribery might actually be a good thing.

By Jan Hanousek and Anna Kochanova at the Centre for Economic Policy Research

2. Remember the rover that was supposed to last three months on Mars? It just logged day 4,000.

By A. J. S. Rayl at the Planetary Society

3. What if there was a step between renting and owning?

By Brett Theodos and Rob Pitingolo at the Urban Institute

4. Here’s the unexpected reason college tuition has skyrocketed.

By Paul F. Campos in the New York Times

5. Are small businesses being overlooked in the fight against poverty?

By Randall Kempner in the Guardian

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY renting

These Are the Most—And Least—Affordable Places to Rent

Fieldston Historic District, Riverdale, Bronx, New York
Alamy Fieldston Historic District, Riverdale, Bronx, New York

A New York City borough is the least affordable—but it's not the one you're thinking of.

It’s no secret that renting has become more expensive in recent years. Now, new data a from housing data firm RealtyTrac lets us know exactly where in the country renting is most and least affordable.

In order to find out which areas are easiest on the typical renter’s wallet, RealtyTrac crunched the numbers on 461 counties across the U.S. with a population of at least 100,000 and sufficient data available, to determine the percentage of the local median household income that gets eaten up by the “fair market” rent (set by the U.S. Department of Housing and Urban Development) on a three bedroom property.

The Bronx, in New York City, where fair-market rent takes up a whopping 69% of median income, ranks as the least affordable county in the nation—a result of the borough’s extremely low median income and relatively high rents.

San Francisco, Brooklyn (Kings County, New York), and Philadelphia, are also high on the list, each taking up around 48% of the typical household salary in rent payments.

REa

On the other end of the spectrum, Delaware County, Ohio, was ranked as the most affordable city for renters, with fair-market rents costing just 14% of the median household income. Delaware was closely followed by Williamson County, Tennessee; Hamilton County, Indiana; and Fort Bend County, Texas.

image008 (1)

RealtyTrac also notes that renting is generally more expensive than buying a house. The firm found monthly ownership costs of a median-priced home—including mortgage payments, property taxes, and home and mortgage insurance, assuming a 10% down payment—account, on average, for just 24% of the median income. Fair-market rents, by comparison, averaged 28% of the typical household income. Overall, RealtyTrac found house payments were more affordable than fair-market rents in 76% of the counties it analyzed.

“From a pure affordability standpoint, renters who have saved enough to make a 10% down payment are better off buying in the majority of markets across the country,” said RealtyTrac vice president Daren Blomquist.

That said, Blomquist warned, “Keep in mind that in some markets buying may be more affordable than renting, but that doesn’t mean buying is truly affordable by traditional standards.” He added, “In those markets renters are stuck between a rock and hard place when it comes to deciding whether to buy or continue renting.”

MONEY First-Time Dad

Why This Millennial Is Kissing the City Goodbye

Luke Tepper
This time next year, Luke will hopefully be playing on grass.

MONEY writer and first-time dad Taylor Tepper announces his retirement from urban living.

Renters in New York City have a uniquely dysfunctional relationship with real estate: The more time we spend living in some of the most desirable housing in the world, the less happy we become. Or maybe that’s just me.

My wife and I pay $2,100 a month for what seems like two square feet and minimal natural light in a converted hospital in a cool Brooklyn neighborhood. There’s an artisanal pizza shop, hole-in-the-wall cafe, and kid-friendly beer garden right around the block. I’m a 15-minute walk from a major metropolitan museum, botanical gardens, and the best park in all of New York. When it’s warm I bike, toss the frisbee, and drink whisky on rooftops. The beach is only 30 minutes away.

Unfortunately, warmth doesn’t last forever, and when it gets cold outside—say, from Thanksgiving to Easter—I spend more time indoors. Which means I’m trapped with a 21-pound baby monster who smashes, grabs, and pounds anything he can get his hands on, from cellphones to lamps. As a result, I’m slowly devolving into madness. Spending hours upon hours inside with two other people, only one of whom yields to reason, punctuated by intermittent excursions into tundra-like conditions, makes it seem as if the walls are slowly inching in on themselves.

Don’t get me wrong—I love the city, I went to school in New York, I’ve lived here for almost the entirety of my adult life. But after 13 months as a father and 19 months as a husband, I’m ready to escape to the land of malls and carpool lanes, single-unit houses and trees, the land of my birth: suburbia.

That said, it’s one thing to want move, it’s another to actually do it. Here’s a window into my thought process—and that of other millennials facing the same decision.

We’d Still Be Renters

Years of high rent and monthly student loan bills, combined with the cost of childcare, made it next to impossible for us to save up for a down payment. So we’re looking to rent wherever we go, which should mean more money left over for us. According to NerdWallet.com’s cost of living calculator, we could reduce our housing costs by about 25% if we moved to northern New Jersey or Long Island.

Even if we had enough funds stashed in our joint bank account, there are a couple of reasons why a home purchase would be a poor move. For one, conventional wisdom states that your target property should be no more than two and a half times your gross income. The odds that we’d find a New York-area home in the $300,000 range that’d we’d actually want to live in are low.

OK, let’s say that we had the savings and lived in a less expensive city. Should we jump into the market then? Not necessarily, says Pensacola, Fla.-based financial planner Matt Becker.

“Don’t rush to buy a house just because you want to go the suburbs,” Becker says. “That can lead to a quick financial decision as opposed to a good one.” Since transaction costs are so high, we’d need to stay in the home for a number of years to for buying to make financial sense. And who knows if we’ll want to live in a particular town for that long? My wife and I are still early on in our careers, we could end up lots of places.

Even Though Now Is a Good Time to Buy

If your bank account is fatter than ours and you’re ready plant some roots, buying might make sense. In fact, if you can get a mortgage, now is a great time to buy, since 30-year mortgage rates are absurdly low. Mortgage behemoths Fannie Mae and Freddie Mac announced late last year that they would allow down payments of as low as 3% on some mortgages. (These moves were directed at people who haven’t owned a home for three years, or are in the market for their first house.)

Once you’ve made the decision to move, you need to think about where you’d like to spend the next seven to 10 years. While we need more space, I don’t want to give up some of the best aspects of the city—good restaurants, a sense of community, hipster/independent movie theaters—in the trade. In that regard I’m like a lot of young buyers, says Greensboro, N.C.-based Realtor Sandra O’Connor. “There’s real movement among millennials who are looking for places to live with walkable areas,” she says. “They don’t want to always be in their car.”

If you’re still undecided about whether renting or buying is the better choice for you, check out Trulia’s rent or buy tool. Those who fall in the rent camp should understand that finding rental units outside of cities can be a lengthy process, per O’Connor and Becker.

All Suburbs Are Not Created Equal

So I want to move, but where should I go? I put the question to Alison Bernstein, president of the Suburban Jungle Realty Group, a firm that specializes in helping its clients find the best New York City suburb for them. Bernstein says that city dwellers eager to jump need to “understand that a house is a house, but the dynamic of a town is very difficult to grasp.”

To that end, Bernstein laid out a number of questions that anyone thinking about relocating needs to consider:

How many working moms are in town? What type of industries are there? What’s the breakdown of private versus public school? Even if the schools are highly ranked, there are towns where there is a lot of momentum to send kids to private schools and this does change the personality of the town quite a bit. What do you do over the summer? Does the entire town empty out? Does everyone hang out at the pool? Who is moving to the town? How will that change the school system and the vibe over the next 10 years?

Bernstein has also noticed a few trends with today’s younger buyers. “They are happiest with a smaller piece of property, a more modest home, and being in a more cosmopolitan suburb. Also they are not plowing every last penny into their house. They are still budgeting for travel.”

The Costs of Commuting

Right now I pay $112 a month (soon to be $116) for a 30-day subway pass to get to the office. We are only a 20-minute drive from my wife’s work, which means we shell out a very reasonable $50 a month on gas. When we move to the suburbs we will pay more. For the sake of argument, let’s say that we end up relocating to Pelham, New York, just north of the city. My monthly bill rises to $222, while my wife’s morning drive will consume almost twice as much gasoline, meaning our monthly outlay will jump by about $160.

But that’s just the money. The time we spend going from home to work and back will grow as well. Doing some back of the envelope calculations, my in-transit time will increase by 10 minutes each way, while Mrs. Tepper will spend an additional 20 minutes or so in traffic. Combined we’ll endure about an hour more per day on our commute, which sends shivers down my spine.

There are a few positives about the longer commute, though. For one, car insurance is generally cheaper outside of the city. According to CarInsurance.com, the average rate in my neighborhood is a little less than two times that of Pelham’s. While I wouldn’t necessarily expect to cut our car insurance costs in half, this savings would take a bit of the sting out of much higher commuting costs.

Aside from lower insurance rates, we could also dedicate a portion of our new abode as a work space. As Mrs. Tepper and I advance in our careers, we hope to have more leeway in terms of a flexible work arrangement. While our commute might be longer, we’ll most likely have to do it less often. And each saved car ride is more money in our pockets.

The Tradeoffs

Getting older involves a series of decisions that have the net effect of limiting one’s personal freedom. I became a journalist, which means I couldn’t be a doctor (leaving aside the question of whether or not I had skill to do it in the first place). Marrying one woman, and being keen on staying married, means I can’t marry a different one. A life in one town is a life not lived in another.

Which is all to say that I’ll miss living in Brooklyn. Despite the hipster clichés, I really do enjoy artisanal, delicious, overpriced hamburgers and 17 different IPA varieties at my bars. I like walking everywhere, even if we have a car, and a touch of self-righteousness about your home is good for the soul.

But I think of my sojourn in New York’s best borough as I think of college: I wish I could stay forever, but it’s time to move on.

Financial planner Matt Becker understands my dilemma. He recently moved from Boston to suburb-rich Pensacola and is still adjusting to his new life. He walks less and drives more. While his young family has more space to play and grow, that also means he has more house to furnish and air condition, which means more costs. I imagine we’ll encounter something similar.

The combination, though, of high rent and minimal space has lost its luster. Even if we end up breaking even in our move, or only saving a little bit, our dollars will go further. We can have a backyard for our son and our dog and us. We’ll have a laundry machine on the premises, so we don’t have to lug 20 pounds of clothes a couple of blocks through the snow. We’ll have a full-size dishwasher.

I proudly proclaim without regret what might have depressed my younger self: these amenities are more appealing than staying in Brooklyn.

More From the First-Time Dad:

Your browser is out of date. Please update your browser at http://update.microsoft.com