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Should I Rent or Buy?

Posted by Meghan Caldwell on October 30, 2019
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Rent vs Buy

We all have our own reasons for deciding whether to rent or buy a home. Sometimes it just doesn’t make sense for someone to purchase a property depending on their work, financial or family status.  For those that are on the fence about deciding if they should rent or buy, I can’t answer the work, financial and family status questions, but I can lay out the facts about what the Memphis housing market looks like. Hopefully, this enables you to make the most informed decision possible.

 

Memphis Price-to-Rent Ratio Among Most Favorable to Homebuyers

The price-to-rent ratio is a method used to compare the affordability of buying to renting in any specific city. The ratio is found by dividing the median home value by the median annual rent. Cities with lower price-to-rent ratios are said to be favorable to homebuyers, making it much more affordable for purchasing a home when compared to local rental prices. Memphis was one of only four U.S. cities with a population greater than 250,000 that had a price-to-rent ratio that was less than 10, at 9.53. For example, the price-to-rent ratio in San Francisco is 50.11, which means that renting in that city is far more affordable than buying. Even Atlanta had a ratio of 22.60, far more favorable to homebuyers than San Francisco, but nowhere near as economical as purchasing in Memphis.

 

Investing in the Memphis Real Estate Market

Investors have started noticing the thriving rental market in Memphis, which is one reason why Memphis was ranked #5 in the top 10 list of best places to buy investment real estate.  This list was compiled from the largest 100 metropolitan areas in the U.S.

 

What Does All This Mean?

If you are in a position to buy a home instead of rent, here are a few things to consider when making your decision.

  • Memphis is one of the most affordable housing markets for first-time buyers.
  • Unlike rentals, once you have purchased a home, your payment on a fixed mortgage loan doesn’t go up every year.
  • Mortgage Rates are currently still low (in the 4’s) when last checked

( ex:  a $250,000 at 4.3% would roughly have a mortgage of about $1,500/month)

  • Memphis is ranked as one of the highest cities in the nation for home investments
  • Tax deduction for interest paid on a mortgage loan as long as the home is no more than $750,000.

Hopefully, this helps paint a clearer picture of the current housing market in Memphis and how it is possible to take advantage of historically low rates to make a solid investment in a booming city. Feel free to reach out to us with any questions or information about a certain property.