Q: Overall, do you think it is a good idea to rent rather than buy in a new city you have just moved to? I am not sure which area in Seattle I want to live in, and of course it will matter where I land a job. I hate to throw money to the landlord, but I hate to buy in an area I may regret later. Other than living fairly close to my job, what else should I be considering about the rent-vs.-buy issue? –Connie
A: You are just one of the millions of Americans tussling with the decision whether to rent or buy your home right now. This is a frequently asked question, and your situation highlights what’s really important in deciding when and whether to buy a home: your life, your vision and your commitment to the area, rather than the market.
Fact is, if you’re going to buy, this is a great time to buy — but it’s not looking like either home prices or interest rates are going to skyrocket anytime in the next couple of years. Seattle is actually one of the real estate markets that trended as relatively recession-proof early in the nationwide housing crisis, but has had a recent decline in home values that gave rise to talks of a double dip.
For homeowners and sellers, that sounds like crisis, but to a would-be homebuyer like yourself, a double dip in home values like the one toward which some believe Seattle may be heading actually signals a longer duration of affordability and opportunity to get a strong value for your housing dollar.
Even if that were not the case, I’d be advising you not to rush into buying. For those of us who place a high level of value toward "investing" your housing dollars into an asset that you own and receive the tax and long-term appreciation advantages from, renting can seem like anathema.
But on today’s market, because of the long, slow trajectory that housing appreciation will likely take over the next decade, buying a home that you can’t hold for at least seven to 10 years may not be financially wise.
The only thing worse than living in a neighborhood you cannot stand is buying in a neighborhood you cannot stand, and being stuck in that home and that neighborhood because, in the short term, your home’s value declines or even stays flat and you can’t afford to sell without coughing up thousands of your own dollars to pay off the mortgage or closing costs.
I’ve also seen newly relocated folks regret buying a home in an area they like, only to discover an area they like more after living in town for a few months.
Rethink renting as an investment in making the right decision about buying. Either get into a short-term rental or month-to-month lease and aggressively get to know your new town, even working with a real estate professional now who can patiently help you explore neighborhoods that seem like they might be a good fit for your personality and your lifestyle.
In this way, you won’t be stuck in a lease if you do happen to find "your" home and neighborhood sooner than later.
As you look for rentals and talk with local real estate agents, explore lease-option scenarios, aiming for one in which some of your monthly rental cost will be applied to your purchase of the home, if you live there for awhile and decide you love it.
Consider areas within an easy commute from work, which may include areas not necessarily super-close to commercial neighborhoods, given Seattle’s strong public transportation infrastructure. Also, though, decide what you want to do with your spare time — gardening, entertaining, home improvements, strolling to the coffee shop, or "downward dogging" at the local yoga studio?
These sorts of decisions about the "flavor" of your desired lifestyle can influence the right neighborhood pick for you.
One of my favorite new sites is NabeWise, which allows you to search for neighborhoods in Seattle and several other areas, based on who you are, what you like to do, and affordability, among other factors. Use it and your real estate pro to hone in on the right areas for you, without being firmly entrenched as a real estate rusher or a fence-sitter.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
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