The question for aspiring homeowners always seems to be: Is it better to buy or rent?
Especially in high-priced markets in large cities, where home prices can be steep and seemingly unattainable. In order to answer the question of, whether to buy or not to buy, let’s examine what favorable qualities to look for when you’re looking into buying or selling a home.
1. Supply and Demand:
It’s all about supply and demand when you’re choosing what time of the year to start your homeownership journey, it can either facilitate the process or complicate things. The ideal environment for buying a home will have a high supply and a low demand, a plethora of home options can mean better prices and a likelihood of less competition. High demand can increase competition, and therefore raise prices, making the process quite tedious. The ideal environment for buying a home will have a high supply and a low demand.
1. Mortgage vs Average Monthly Rent Costs:
When mortgage rates hover around the 3% mark, it is more affordable to buy a home and pay the mortgage than to rent a home. However, this is quite a rare occurrence, as mortgage rates have risen in the past two years to a National average of 7%. There are very few cities around the country with these conditions. However, the Mortgage-to-Rent ratio is a great indicator to watch out for if you’re looking to switch from renting to homeownership. It’s also a great indicator of the market in general if you’ve been on the sidelines for a while waiting for the right moment to buy.
For those of us in the Tulsa area, competition has been high, even after the cooldown of the Summer months. According to Redfin, on average, Tulsa homes sell in about 13 days, the demand is high and the supply is low, especially as more and more people move in from other cities across the U.S. If you’re looking to sell your home, this is the ideal climate, as the median house price is up 2% from last year’s at $225,000.
But there is a silver lining for those who want to buy a home. In August, the median home price was $285,000, compared to September, there was a $60,000 difference in just one month! Past trends have proved that the Summer months are the busiest time of the year for Real Estate, so as the weather cools down, aspiring homeowners can feel relief in knowing that median house prices will drop significantly to a stable, expected value, and for home sellers, there is still an opportunity to take advantage of the popular Summer season.
So mortgage costs are high, but why is buying a home in the Tulsa market still competitive and at such a high demand? The benefits of homeownership heavily outweigh renting, and it certainly beats the frustrations of having a landlord. Some of these benefits include:
1. Home Equity:
Home equity builds over time as one pays off their mortgage, this is ultimately how much of your home you actually own. Built-up home equity can be used as collateral for other loans or be sold in order to cash out the home equity.
2. Tax Benefits:
Homeowners receive tax benefits, allotting tax deductions and exclusions. There are three types of tax benefits for homeowners: Mortgage Interest Deductions, which allow homeowners to deduct the interest paid on their mortgage from their annual taxes. Property Tax Deduction, which allows homeowners to reduce $10,000 as a married, jointly filing couple or $5,000 as a single filing person on their state and city property taxes. Capital Gains Exclusion, which allows homeowners who have sold their homes to exclude portions of profits made from the sale of the property from the homeowner’s federal income tax.
3. Stable monthly payments:
Unlike renters, homebuyers can expect much more stable monthly payments with fixed mortgage payments that are ultimately protected from the power of inflation. When the environment is right and the mortgage rates are around the 3% mark, or the ratio favors homeownership, it is ideal to enter a mortgage that will remain a fixed cost. In contrast, renters will feel the effects of inflation more drastically, seeing their rents increase in cost during times of inflation.
4. Home Appreciation:
When the supply is low and demand is high, homeowners who are looking to sell their property thrive in the increase of home prices as a consequence of inflation. Homeowners can sell their properties for more and earn a commission. Real estate is an excellent way of investing and returning a high return, as real estate gains value over time.
We’ve established that when it comes to choosing between Buying and Renting, buying a home has more short-term and long-term benefits, and if you’re deciding when to start that journey, there are various trends to look out for and consider.
Here at Trinity Properties, we understand the Tulsa Real Estate market’s ins and outs, with 14 years of experience navigating and helping our clients navigate the Tulsa market. We aspire to help our clients get the most out of the market whether it’s buying or selling a home.
