BUY OR RENT?
* Factors to consider when buying
Home price: Metro Phoenix's median resale home price is currently $211,000.
Rootedness: How long do you plan to live in the area? Based on forecasts for home-price increases, most current home buyers likely will need to hold onto a home for two to three years if they expect to sell without taking a loss.
Mortgage rates: The average rate for a 30-year fixed-rate mortgage is 4.37 percent.
Down payment: Most lenders are requiring at least 10 percent of the purchase price now, but for borrowers with less-than-stellar credit, the down-payment requirement could be as high as 20 percent.
Taxes: Property taxes fluctuate across the Phoenix area, but a homeowner with a house valued at $211,000 likely would pay at least $600 a year.
Tax breaks: Homeowners with a $200,000 mortgage and a 4.5percent interest rate can save $3,000 to $3,500 on their federal taxes if they itemize, according to Bankrate.com.
Maintenance: Homeowners with a house valued at $200,000 to $250,000 pay between $3,000 and $5,000 to take care of the house a year, according to industry sources.
Insurance: The annual median cost for $100,000 of coverage on a Phoenix home is $500, and about $1,000 for $300,000 of coverage, according to the Arizona Department of Insurance.
Homeowners association: Monthly fees vary, and not all communities have HOAs.
* Factors to consider when renting
Rent: The average rent for a metro Phoenix apartment is $820 a month, according to research firm Axiometrics.
Rootedness: How long do you plan to live in the area? Most landlords require at least a six-month lease. In popular areas and for nice apartments and homes, a 12-month lease is the norm.
Rent increases: The average Valley apartment rent climbed 4.5 percent during the past year, so to stay in the same place next year, expect to pay $40 more a month.
Security deposit: Most landlords require one month. Pet deposits vary.
Renters insurance: To cover $15,000 in personal items, the median cost is about $200 a year, according to the Arizona Department of Insurance. To cover $40,000, the median is about $400.
THE BOTTOM LINE: Cost to buy versus rent
* Initial costs
Buy: Down payment of 10 percent on a $211,000 home is $21,100.
Rent: Average deposit of $820, plus potential pet deposit.
* Monthly payment
Buy: Typical mortgage payment of $1,150 on $190,000 loan with interest rate of 4.37 percent, plus property tax and insurance payments.
Rent: Monthly payment of $850 including renters insurance.
* Annual cost
Buy: $3,000-$10,000 depending on costs to take care of the house and homeowners-association fees.
Rent: None.
* Income-tax benefits
Buy: $3,000-$3,500 a year.
Rent: None.
Return on investment
Buy: Depends on home-price increases and how long you own the home.
Rent: None.
WHY HOMEOWNERSHIP LEVELS HAVE DROPPED
In 2012, the metro Phoenix homeownership rate fell to 62.9 percent from 67.3 percent in 2009.
During the housing boom, the region's rate hovered around 70 percent.
The trend doesn't seem to be turning around. Home buying has slowed from last year. In June, home sales were down 11 percent compared with June 2013.
For those without $10,000 to $40,000 for a down payment, there's no option to buy now. The risky mortgages that required little to no down payment during the housing boom are long gone. Lenders require 10 to 20 percent down now.
There are more options to rent now since investors purchased more than 150,000 Phoenix-area houses during the crash and converted them into rentals. And apartment developers are building more complexes in popular neighborhoods across the Valley.
THE CASE FOR BUYING
Rents have been rising along with home prices, making houses yet again a potentially good investment.
The area's median sales price has rebounded more than 65 percent since the crash to $211,000. But according to mortgage research firm HSH Associates, metro Phoenix remains the nation's eighth-most-affordable big U.S. city to buy a home.
It calculated that buyers need to earn $42,125 a year to purchase a median-priced house in the area.
THE BOTTOM LINE
Anyone trying to decide between buying and renting should consider all of the costs and factors: long-term plans, interest rates, maintenance costs, deposits, tax breaks and the best investment for their money.
Real-estate analyst Mike Orr of Arizona State University has this advice for those on the fence about what to do.
"Don't worry about trying to time the market or buying something that's good for investment," said Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business.
"Just find somewhere you really love and can comfortably afford."
Source: AZCentral.com
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