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2013-09-10 11:45:36
The Problem with Long Term Renting: Inflation

You're renting today because the last thing you want to do is get 'stuck' in a place and lose your freedom to be able to quickly move, and/or relocate to another area in or out of Lane County.  This makes great sense as home owners do lock themselves into their location a lot more compared to someone who simple rents (although breaking a lease will incur a financial penalty).  


There are many things that bring great priviledge to ownership:  

- Homes are affordable right now compared to where they were 8 years ago

- Mortage rates are very low

- Mortgage interest & property tax payments are tax deductable

- Ownership allows you to do things the way you want to without landlord limitations such as:  painting or owning a dog


While these are definitely great benefits to home ownership, we believe one of the best reasons to own is to avoid 'rent inflation'.

Let's say today you were able to rent a home for $1,200 or buy it with a 30 year mortgage payment at $1,400 principle & interest.  Assuming a very conservative 2% rent inflation year after year, that same home will be renting for:

5 years later: $1,299

10 years later:  $1,463

20 years later:  $1,783

30 years later:  $2,174

Now hopefully your income has increased as well and those payments will be affordable.  But consider the difference with home ownership.  Your payment is fixed at $1,400 year after year & after that 30 year mark, you own your home free & clear. The only thing to pay will be property taxes vs. $2,174 per month.


Don't get us wrong.  Home ownership isn't for everyone.  But for those who don't have any plans to relocate in the near future, locking into a home now may be one of your best financial moves.  Contact us if you have any questions.  john@teamromito.com / 541.554.7918




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