Better To Buy In Honolulu Than To Rent!
February 26th, 2009 categories: For Buyers, Military
If you are going to live in Honolulu for less than 2 years, in any real estate market, I have always believed you are better off renting than buying. If Oahu is going to be your home for the mid to long-term, than I advocate purchasing rather than renting. A recent Wall Street Journal article, confirmed that recent drops in values and interest rates have made owning more beneficial than renting.
“Over the past 18 years, after-tax mortgage payments have averaged 26% more than rent payments, according to Green Street Advisors, a real-estate consultancy based in Newport Beach, Calif. In 2006, at the height of the housing bubble, mortgage payments reached as high as 66% more than rent payments. But by the end of 2008, average monthly rent for the largest 50 metropolitan areas was $1,045, compared with after-tax mortgage payments of $1,300, assuming a rate of 5.5% on a 30-year fixed mortgage. That means mortgage payments averaged just 24% more than rent payments, the narrowest gap since 2001.”
CLICK HERE TO READ THE WSJ ARTICLE
The gap between rental rates and mortgage payments are important to consider, but they are not the only reason to buy. Don’t forget these important reasons too.
1. Long-term equity appreciation. I don’t have a crystal ball, but do you think Honolulu real estate values will be higher or lower in 2019?
2. Forced savings. Here is an example, if you obtained a $100,000 loan at 5.5%, that is fully amortized over 30 years, then in 10 years you would owe approximately $82,541! Assuming no appreciation, by paying down the mortgage you will have built equity in your property of $17,459.
3. Stability and control. I have not see statistics, but I will bet you donut that renters move way more often than those who own their home. By owning you control your destiny, no one can give you a 45-day notice to vacate and therefore you life is much more stable.
4. Pride of ownership. As a renter, if you improve your rental when you leave you will not benefit from the improvement. Therefore, most tenants do little to improve their residence. Once a home is owned, I have noticed that the new owners generally begin adding and improving it to their tastes and I think this is because they own it and can take pride in that fact.
5. Decorating to your hearts content. Most landlords try to keep their rental bland, because light carpet and white walls are generally easier to rent than unusual colors and floor coverings. As a renter, you may find it difficult to gain a landlords permission to paint a wall red or blue, or to change the bathroom tile to black granite. Once you own, have at it. Make your home what ever color you like, put up the picture of Elvis and install the bidet.
There are many other reasons to own. Frankly, I think 1 through 5 above far out weigh the gap between rental and mortgage payments. If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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