Buying vs Renting in Butte County
Buying vs Renting in Butte County
It's a long-running debate that affects everyone at some point in their life: is it wiser to rent or to buy a home? In this article, we take a quick look at the arguments for and against homeownership along with what's going on in our own Butte County, where market data suggests buying a home may be cheaper in the long run.
RENTING: PROS AND CONS
Pros of Renting: Flexibility, Lower Costs, Free Maintenance
- Tenants are generally only committed to their home for a one year lease period, which means you have the flexibility to move when you need to.
- Renters don't have to pay a large downpayment or for things like property taxes or homeowners insurance, so renting is often (at least initially) cheaper than buying. Your landlord may also agree to pay some of your utilities, which is a big deal during summer when PG&E bills soar.
- When the AC goes out in the middle of summer, or the hot water heater breaks during winter, it's the landlord's job to pay to get it fixed.
Cons of Renting: Relocation, Rising Rents, Rules
- The flexibility of renting comes with the downside of insecurity - you may be asked to leave at relatively short notice.
- This insecurity also applies to your rent. Once your lease is up, there's nothing to prevent your landlord from asking for more money when you re-sign.
- Unlike homeowners, who have a great deal of freedom, tenants often have to agree to a list of rules that may prevent, for example, having a pet or redecorating.
BUYING: PROS AND CONS
Pros of Buying: Investment, Security, Remodeling
- If house prices increase, as they often (but not always) do, then your home becomes an investment that will pay out over the long term. Even if prices don't increase substantially, the mortgage payments you make are a kind of 'forced savings' that slowly increase the amount of equity you own over time until you eventually own the home outright. You may also be eligible for tax breaks to cover your interest payments and property taxes.
- Homeowners have the security of remaining in one place and paying a mortgage that cannot be inflated unexpectedly at the whim of a landlord.
- When you own a home, you get to remodel it to suit your family's changing tastes! The opportunities for DIY are seemingly endless.
Cons of Buying: Responsibility, Costs, Inflexibility
- A homeowner is responsible for the upkeep and maintenance of the property, which can add up to a significant amount of time and money.
- Besides the periodic cost of a new roof or replacing the fridge, when you own a home you have to pay monthly insurance and yearly property taxes. You also have to pay more at the outset in downpayment and closing costs, though these days a 20% downpayment is no longer standard.
- Moving house is expensive! If you are likely to have to move in the next five years, it may not be the right time to buy.
WHAT'S THE HOUSING MARKET LIKE IN BUTTE COUNTY?
House prices generally rise year by year, and for the past several years the Butte County housing market has been a strong seller's market - especially after the tragic destruction of Paradise in the Camp Fire of 2018. However, a global financial event, such as the crash of 2008, can change things. It's too early to tell exactly what impact the current COVID-19 crisis will have long-term, however, in the short term, we may see a temporary decrease in house prices, signifying a good time to buy.
Median house prices in Butte County have risen steadily since 2011 from a low of $154,000 to a recent high of $338,000. Rents, on the other hand, have risen from an average of $1,000/month to $1,700/month. A two-bedroom home in Butte County will currently sell for an average of $228,000, or rent for about $1,400/month. If you plug those numbers into a buy vs rent calculator, the math suggests it's going work out cheaper to buy after three years, and you'll end up saving an average of $156/month by owning your home.
WHAT IF I CAN'T AFFORD TO BUY?
Interested in buying a house but worried about the downpayment and unsure of what you're able to afford? You need to talk to a local realtor. There are all kinds of programs available to help first-time homebuyers in Butte County, and the downpayment your need may be lower than you think. An experienced real estate agent can get you pre-approved for a mortgage so you go into the home search knowing exactly what to look for.
If you would appreciate the help of an experienced guide through the home buying process, please give us a call today!
P.s. You may not be aware that the help of your buyer's agent actually comes free - our commission is paid by the seller. So make sure to take advantage of that help as soon as possible!
You can call or email us at the address below, or fill out our contact form to let us know what you're looking for.